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UPDATE 1-Samsung says talk of defective chips "groundless"

Wed Jun 18, 2008 10:43pm EDT

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SEOUL, June 19 (Reuters) - Samsung Electronics Co Ltd, the world's largest maker of memory chips, dismissed as "groundless" on Thursday a Taiwanese media report that problems with some of its chips had led to them being rejected by customers.

Market talk about possible defects in its dynamic random access memory (DRAM) chips sent Samsung (005930.KS) shares down as much as 3.7 percent earlier. The stock was trading down 2.41 percent at 687,000 won by 0215 GMT, compared with the wider market's 1.32 percent loss.

"The report about our chips being rejected is groundless," said Woo Jong-sam, vice president of public relations at Samsung.

Taiwan's DigiTimes reported on its English Web site that Samsung had encountered production problems in using 68-nanometre technology, with sources indicating a batch of 80 million 1Gb-equivalent chips were recently rejected by PC makers.

DRAM makers, including world No. 1 Samsung and second-ranked Hynix Semiconductor Inc (000660.KS), are emerging from a prolonged slump caused by oversupply and sluggish demand. But they are still under pressure to boost output and cut costs by introducing more advanced and difficult-to-adopt technologies. (Reporting by Lee Chang-ho, writing by Rhee So-eui; editing by Jonathan Hopfner)



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