Samsung Electronics, the world's biggest TV brand and memory chip maker, forecast explosive growth in 3D TV sales and memory chips this year, during its fourth quarter investors conference on Friday.
The electronics giant expects demand for flat panel TVs and other products to soar this year as the world recovers from the recession. A lack of new investment during the downturn will also put a cap on production of most products, except LCD screens, keeping prices firm. The company sees a possible downturn in the LCD screen market in the second half of this year as new factories come on line globally, a boon to consumers who may see more LCD TV bargains late this year as a result.
The company is particularly bullish about the new 3D TV category, an area some analysts call a tough sell due to high prices and inconveniences such as the need to wear 3D glasses for viewing.
“We expect demand for 3D TVs to grow explosively,” said Sueohk Shim, vice president of Samsung's visual display business. Samsung expects to sell 2 million 3D TVs this year, she said.
Strong global PC sales in the fourth quarter sent DRAM prices up as much as 30 percent from the start of the quarter, boosting Samsung's quarterly earnings, it said in a statement. Increased sales of consumer electronics such as mobile phones and flat panel TVs in the holiday season also helped the electronics giant in the final three months of last year.
The company swung to a 3.7 trillion Korean won ($3.21 billion) operating profit in the fourth quarter ending Dec. 31, after posting a 740 billion won loss at the same time last year. The operating profit matched Samsung's own forecast for the quarter and slightly beat analyst expectations. The company's revenue rose 19 percent year-on-year to 39.2 trillion won in the quarter.
The company’s revenue rose 19 percent to 39.2 trillion won in the fourth quarter fueling a record high 2009 for Samsung as revenue reached 136.3 trillion won for all of last year.
“Despite the uncertain business environment in 2009, Samsung was able to achieve record revenues and strong profitability,” said Robert Yi, head of investor relations at Samsung, in a conference call Friday. “We see this positive growth and performance flowing on into 2010 as the global economy continues to stabilize,” he added.
Samsung, also the world's largest maker of LCD screens, predicted a strong first quarter for its LCD business, but said there could be a downturn in LCD panel prices in the second half of this year because new production lines globally would increase world output.
Still, companies expect global sporting events such as soccer’s World Cup and the 2010 Winter Olympic Games to spur demand for flat panel TVs. Samsung’s biggest TV rival in South Korea, LG Electronics, predicted a sharp rise in global demand for LCD TVs this year when it announced fourth quarter results on Wednesday.
Samsung sold 10.88 million flat panel TVs in the fourth quarter led by strong sales of LED TVs and LCD TVs with over 40-inch panels as well as growth in emerging markets such as China. The company sold 2.5 million LED TVs—flat panel TVs with LED (light emitting diode) backlights—last year and forecast sales of 10 million units this year.
The TV giant forecast over 20 percent year-on-year growth for global flat panel TV shipments in 2010.
Samsung rival LG sold 6.6 million flat panel TVs during the fourth quarter and 19.5 million for all of 2009.
Samsung’s mobile phone business also performed well in 2009, keeping it second place globally behind Finland’s Nokia. The two companies also predicted the same growth rate for worldwide mobile phone sales this year, 10 percent.
Samsung sold 69 million mobile phones in the fourth quarter, compared to 126.9 million for Nokia. For all of last year, Samsung sold 227 million handsets, beating its sales target of 200 million. Nokia sold 431.8 million handsets last year, down 7.8 percent year-over-year. The global handset market totaled 1.14 billion units last year, according to Nokia.
Samsung’s full-year 2010 global handset growth forecast of 10 percent year-on-year matched that of Nokia.
In its semiconductor business, Samsung believes strong worldwide sales of PCs will drive chip revenues 10 percent to 20 percent higher this year and that prices of DRAM and NAND will remain strong. The company noted that PC vendors may start to reduce the amount of DRAM they put in PCs due to higher prices, a warning consumers should beware of because memory chips play a role in the speed of a system.
Samsung expects to aggressively increase its PC business this year and work on more sales to corporate customers, executives said during the conference call. The company sold just over 6 million PCs last year, mainly laptops and netbooks, and it will continue to focus on those product lines.
“This is a business in which we are investing heavily and we look at this as a potential growth business,” Yi said.