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Samsung Electronics to cut capex 30% or more

Samsung Electronics said at an investor conference that capital expenditures for 2009 would be significantly reduced in the face of weak demand and poor economic outlook. Giving guidance on CapEx, investor relations executive, Chu Woo-sik, spending reduced by as much as 30% in 2009, approximately US$4.84 billion, down from approximately US$6.9 billion in 2008. The executive said that the upper range of spending could be approximately US$5.5 billion. However, a final figure had yet to be made and changes could be made, inferring that a lower range could be set, depending on market conditions.

Samsung also revised DRAM bit unit growth projections, noting that bit growth would decline from 100% to 90% in the final quarter of 2008, indicating a slowing in either capacity ramps or node migrations as DRAM ASPs decline faster than expected as demand weakens.

Rumours had been circulating in recent weeks that the dire memory market would lead to Samsung making drastic cuts in capital spending with talk of as much as a 50% cut to be expected in 2009.

Without greater clarity, and no final budget yet set due to the economic climate, spending levels could still be revised lower.