UPDATE 1-Shin-Etsu profit holds its ground on PVC

(Recasts to quarterly results, details)

* Quarterly profit holds up on construction material sales

* Sees continuing PVC demand in emerging markets

* To make up for stagnant wafer sales with cost cuts

* To cut 2008/09 chip-related capital spending

TOKYO, Oct 23 (Reuters) - Japan's Shin-Etsu Chemical Co Ltd (4063.T) posted a virtually unchanged quarterly profit on Thursday as solid sales of construction materials made up for sluggish sales of silicon wafers.

Shin-Etsu, also the world's biggest maker of silicon wafers used to make chips, kept its annual outlook, in contrast to rival Sumco Corp (3436.T) which slashed its profit estimate this week.

Shares in Shin-Etsu jumped on the news, closing up 4.5 percent at 4,180 yen.

Shin-Etsu is trying to offset slowing growth in its wafer business as chipmakers deal with an inventory pile-up, and it is boosting sales of construction materials in markets such as Brazil, the Middle East and Africa.

Shin-Etsu earned a net profit of 49.5 billion yen ($508.6 million) in July-September, just 0.1 percent shy of its profit the previous year. It kept its annual outlook for a net profit of 200 billion yen, in line with consensus estimates.

Sales of polyvinyl chloride (PVC), a resin used in pipes, wires and other construction materials, and sales of caustic soda -- a by-product used in detergents -- grew in emerging markets, outweighing the effects of the U.S. housing slump, Shin-Etsu said.

Shin-Etsu, the world's largest maker of PVC, has yet to see the effects of a slowdown in housing starts in countries like Brazil amid the global financial crisis, spokesman Tetsuya Koishikawa said.

"If that happens, it's just a matter of finding new markets," he said.

In Shin-Etsu's mainstay silicon wafers, the company said it was cutting its capital spending plans for the year to March to about 150 billion yen to 200 billion yen, down from a previous estimate of 200 billion yen to 250 billion yen.

A deepening chip slump has meant that sales volumes for silicon wafers have stagnated since January, Shin-Etsu Director Ken Nakamura told a news conference, requiring "persistent marketing, shorter depreciation periods, and cost cuts," he said.

Quarterly operating profit at Shin-Etsu stood at 74.3 billion yen, up 5.4 percent from the previous year, on sales of 354.6 billion yen, up 2.7 percent.

Having reversed earlier losses, its shares closed at 4,180 yen, outperforming a 2.5 percent drop in the Nikkei average .N225. Sumco's shares slid 6.4 percent. (Reporting by Mayumi Negishi; Editing by Hugh Lawson)