September 7, 2010 / 8:37 AM / 9 years ago

UPDATE 1-Samsung warns Q4 DRAM oversupply on weak PC sales

* Samsung sees DRAM oversupply from Q4-exec

* Weak PC sales remain the biggest concern

(Adds details)

TAIPEI/SEOUL, Sept 7 (Reuters) - Samsung Electronics (005930.KS), the world’s top memory chipmaker, warned on Tuesday the computer memory chip market could be in oversupply from next quarter as a sputtering global economy may further weaken PC sales.

“If the PC market continues to slow, we may see a kind of oversupply in Q4 or Q1,” Kwon Oh-hyun, head of Samsung’s chip business, said at a media conference at its annual mobile solutions forum in Taipei.

“Because of mobile phones and servers, the DRAM (dynamic random access memory) market will be stable, while PC is the weakest sector and it depends on demand from the U.S. Thanksgiving” in late November, which typically marks the beginning of the heavy pre-Christmas sales season.

The downbeat comment raises concerns that the DRAM industry’s super cycle may be nearing an end and profitability will come under heavy pressure from the next quarter through the first half of next year.

Prices of DRAMs, widely used in computers, have turned weaker since July after an unusually strong first half, as PC demand growth lost momentum and as the European debt crisis threatens to further weaken sales of computers and other consumer goods.

The caution by the South Korean firm adds to a series of previous warnings by Samsung and its local rival Hynix Semiconductor Inc (000660.KS), among others, that prices would fall in the second half due to the uncertain economic outlook.

PC sales are also taking a hit as consumers delay purchases and opt for smaller tablet computers, which use fewer DRAM components than desktops and notebooks.

The new device is gaining popularity after Apple (AAPL.O) introduced iPad and vendors such as Samsung, Nokia NOK1V.HE, LG Electronics (066570.KS) and Dell DELL.O are rushing to get a piece of the emerging market.

Daewoo Securities lowered its PC sales growth to 17 percent this year from 18 percent last week, citing weak demand from Europe, while Nomura expects a mid-single percent increase in PC shipments this quarter.

Shares of Samsung fell 1 percent over the past three months and Hynix dropped 17 percent, lagging a 7 percent gain in the KOSPI. (US$1=T$32) (Reporting by Baker Li and Miyoung Kim; Editing by Jonathan Standing and Ken Wills)

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