FRANKFURT/SEOUL (Reuters) - German memory chip maker Qimonda filed for insolvency on Friday and South Korea’s Samsung Electronics posted its first-ever quarterly loss, in the latest signs of recession hitting the technology sector.
Qimonda said it filed an application to open insolvency proceedings, aiming to reorganize operations as part of an ongoing restructuring program — just nine days after a similar move by Canadian telecoms gear maker Nortel Networks.
Qimonda’s parent company, Infineon, said it expected to make provisions in the hundreds of millions of euros.
Shares in Infineon were down 5.6 percent to 0.675 euros by 1056 GMT, among the biggest fallers in a 2.3 percent lower European technology index.
Qimonda has been struggling with a slump in prices for dynamic random access memory (DRAM) chips, which are used mainly in personal computers.
South Korea’s Samsung said oversupply and uncertain demand on the chip market would continue, while it posted its first-ever quarterly loss, joining a host of technology companies including Microsoft and Nokia suffering from diving prices and slumping consumer demand.
But Internet search giant Google proved relatively resilient to the gloom, joining Apple and IBM as one of the rare bright spots in the battered tech sector.
Consumer demand for computers, phones, TVs and other gadgets has slumped as the global financial crisis becomes a broad recession engulfing the United States and much of Europe, and dampening demand in once-resilient emerging markets.
Samsung, the world’s top maker of memory chips and LCD screens, posted a fourth-quarter operating loss of 937 billion won ($682 million), more than double the loss analysts polled by Reuters had expected.
“Samsung will likely bleed more, if not suffer wider losses, as the global economy is expected to slump further well into the first half of this year,” said Lee Jeong, an analyst at Hana Daetoo Securities.
“Although there are signs that the prices of chips and LCD panels have stabilized recently, it’s hard to predict when they will pick up, given the bleak outlook for the global demand.”
Shares in Samsung, South Korea’s biggest company, worth around $48 billion, closed down 4.1 percent, while the cost of insuring against a default on its debt rose.
Technology stocks across Asia were already under pressure after a procession of grim news in the past 24 hours.
In Tokyo, shares in Japan’s Sony Corp tumbled 7 percent after the maker of Bravia flat TVs, Cyber-shot digital cameras and PlayStation games machines said it would post a bigger-than-expected $2.9 billion operating loss this business year.
News from the United States was little better.
On Thursday, Microsoft Corp surprised Wall Street with a profit miss and plans to slash up to 5,000 jobs. It stopped offering quantitative guidance, except to say profit and revenue would almost certainly drop in the next two quarters.
The world’s top software maker blamed PC market weakness and the popularity of low-cost netbook computers. Its shares fell 11.7 percent to an 11-year low.
“Clearly business conditions are worse than people were expecting,” said Richard Williams, analyst at Cross Research.
Amid the gloom, investors were relieved Google Inc at least managed to beat lowered expectations. While its revenue grew only 18 percent year-on-year — a shadow of the 50 percent growth rate the company used to enjoy — analysts said that was strong for the current climate.
“At least we have something to feel good about with this Google news in what has been shaping up to be a gloomy earnings period,” said Keith Wirtz, president and chief investment officer at Fifth Third Asset Management.
“It tells me that Google is very focused on their franchise and execution as a marketing, advertising and media company. It speaks highly to their business focus.”
Google shares rose 1.5 percent on the results.
Additional reporting by Irene Preisinger and Gernot Heller in MUNICH, Rhee So-eui in SEOUL, Nathan Lyne and Sachi Izumi in TOKYO, Tiffany Wu in NEW YORK; Writing by Tarmo Virki and Lincoln Feast; Editing by Rupert Winchester