Chipmaker Samsung profits skid

Strong telecom sales helped the giant chipmaker

SEOUL, South Korea -- South Korea's computer chip giant Samsung Electronics has posted a 75 percent drop in third-quarter net profit.

Suffering from a global chip downturn, the world's largest chipmaker said its net profit plunged from 1.7 trillion won a year ago to 420 billion won ($325 million).

But the results were not as bad as analysts had expected amid a waning demand for chip products. They had predicted just 100 billion won in profits, according to Reuters news agency.

The global market for DRAM chips is expected to shrink 67 percent this year and another 19 percent in 2002, market research firm Gartner Dataquest said last week.

CNN.com Asia More news from our Asia edition

Strong telecom sales along with gains from profitable Samsung Group affiliates helped pull the giant out of the doldrums.

Weather the storm

The chip giant has vowed to use its size to weather the storm, saying it won't be cutting chip production despite the heavy losses in its semiconductor division.

Already weaker players have cut back.

In July, embattled Hynix semiconductor suspended operations at its U.S. chip plant for six months.

A proposed merger of chip businesses at fourth-ranked Infineon Technologies AG and six-ranked Toshiba Corp is also expected to lower production for the time being, analysts said.

Samsung said it would tighten its belt by lowering overall 2001 capital expenditure to 4.7 trillion won from 5.1 trillion won.

Analysts said this move would likely help Samsung spur its handset and other profitable businesses in the face of bleak chip sector forecasts.

Samsung's brisk sales of 2.5-generation mobile phones in the domestic market have played a large role in offsetting the current downturn in chip prices.

Samsung is the world's fifth largest producer of cell phones with 6.9 percent global market share.

Samsung Electronics shares ended down 500 won at 169,500 won, slightly under-performing the benchmark index, which rose 0.12 percent.