Samsung Elec profit jumps, outlook strong

By Marie-France Han and Rhee So-eui

SEOUL (Reuters) - Samsung Electronics (005930.KS: Quote, Profile, Research, Stock Buzz), the world's top maker of memory chips, beat forecasts with a 37 percent rise in quarterly profit on stellar performances in flat screens and mobile phones, sending its shares 4 percent higher.

Samsung's outlook remains solid thanks to its strength in TV screens and handsets, lifted by a softer Korean won and robust demand, while a long-suffering chip division is expected to turn the corner by the second half.

Hynix Semiconductor (000660.KS: Quote, Profile, Research, Stock Buzz), the world's second-biggest memory chip maker, disappointed the market on Friday with a net loss that was almost 50 percent bigger than consensus.

Japan's Toshiba Corp (6502.T: Quote, Profile, Research, Stock Buzz), which makes NAND-type flash memory chips widely used in portable electronic devices, posted a 95 percent drop in quarterly profit as chip prices tumbled, and forecast flat earnings growth. Third-ranked memory chip maker Elpida (6665.T: Quote, Profile, Research, Stock Buzz) swung to a net loss from a profit last year.

"Samsung's competitiveness in memory chips and LCD reached a level that none of its rivals can aim to match. Samsung will continue to post outstanding results," said Park Hyun, analyst at Prudential Investment & Securities . "Hynix on the contrary is entering a slump. Insufficient investment so far is taking its toll."

CHIP PRICES TO RECOVER

Makers of dynamic random access memory (DRAM) worldwide are hoping that spending cutbacks from cash-starved chip makers and improving demand ahead of the back-to-school and gift-giving seasons later in the year will help them back into profit.

Supporting those recovery hopes, market research firm iSuppli upgraded its rating on the DRAM market to "neutral" from "negative", citing indications that the worst was over.