Samsung CEO: To hike memory chip capex

Reuters News
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Posted: Jul 25, 2011 9:39 AM
Samsung CEO: To hike memory chip capex

SEOUL (Reuters) - Samsung Electronics Co <005930.KS> plans to raise investment in memory chips this year and will not cut its overall investment for the second half despite economic uncertainty hitting component demand, its chief executive said on Monday.

The comments come as its core rivals are slashing investment and cutting outlook as debt problems in Europe and the United States continue to depress prices of memory chips, flat screens and sales of computers and televisions.

"Memory chips will receive more investment than we had originally planned...and our total capital spending in the second half will not be reduced," Samsung chief executive Choi Gee-sung told reporters on the sidelines of an industry meeting in Seoul.

"We are not making investment plans based on just one-year business outlook in mind," Choi said, referring to uncertain demand prospects for the second half.

Its flat-screen rival LG Display <034220.KS> slashed its 2011 capital expenditure plan by 18 percent to between 4.0 trillion and 4.5 trillion won last week and declined to provide an outlook as it reported a third consecutive quarterly loss.

Samsung, the world's No.1 maker of memory chips and televisions and No.2 manufacturer of mobile phones, spent 5.5 trillion won in the first quarter.

The company said in late April when it announced first-quarter results that it would consider increasing its 2011 capex budget of 23 trillion won depending on the market outlook.

Samsung is due to report its second-quarter results on Friday. It flagged earlier this month that its underlying operating profit would show a decrease by a quarter to 3.7 trillion won, as its LCD flat screen business is widely expected to report another loss.

Shares in Samsung closed down 0.4 percent, versus a 1 percent drop in the wider market <.KS11>.

(Reporting by Miyoung Kim; Editing by Jonathan Hopfner and Ken Wills)