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Is Samsung planning a 50 percent cut in capex?
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Even Samsung is feeling the effects of overcapacity and plunging ASPs for its NAND and DRAM chips as its quarterly profits declined 44 percent and only made approximately $850 million in the last quarter. Things like mobile phones and LCD’s are now under huge pricing pressure with margins down to just 7 percent.Semiconductor margins are down 74 percent Y-on-Y.
Although executives said in a conference call that capital spending would be cut by a small amount this year, and bit growth curtailed to 90 percent rather than the expected 100 percent, rumours are now circulating that Samsung is considering a much more drastic cut in semiconductor spending for 2009.
The word from the cleanrooms is that spending could be down by as much as 50 percent in 2009 as the market demand for NAND has softened considerably and that it will weaken further in the first half of next year.
On the DRAM front spending will suffer the most but if the ASPs start rising as supply/demand gets back in balance by mid-09 then more spending is expected. Technology buys are expected to be at the core of Samsung’s strategy next year, with bit growth closer to 60 percent through continued node migrations.
Samsung Electronics has still been making profits while everyone else continues to see quarterly losses, but as demand wanes it looks likely that Samsung Electronics will also see red over the next few quarters.
