Asia memory chip makers set for huge Q3 losses

* What: Asia chip makers' Q3 earnings

* When: Powerchip (Oct 21), Nanya (22), Samsung Elec (24), Toshiba (29), Hynix (30), Elpida (Nov 6)

* Price slump steepening, demand a question amid downturn

* Samsung alone with net profit thanks to non-chip earnings

SEOUL, Oct 21 - Asia memory chip makers are bracing for a mountain of losses when they post quarterly results in coming weeks, with a lengthy industry downturn showing no signs of abating as global economies slow.

Time may be running out on the weakest manufacturers as losses mount and inventories grow. With consumer demand cooling heading into the key Christmas shopping season, many stores are reluctant to place big orders for shiny new computers and snazzy hi-tech gadgets.

Top-ranked Samsung Electronics Co Ltd <005930.KS> will be the only firm to avoid red ink, thanks to its flat screen and mobile phone businesses, analysts said.

"The third quarter is going to be a disaster, and the fourth quarter is going to be even worse," said Peter Yu, an analyst at BNP Paribas in Seoul.

Makers of dynamic random access memory (DRAM), used mainly in personal computers, have been bleeding heavily as a 20-month slump has savaged prices and profits.

Meanwhile, the smaller market for NAND flash chips, used mainly in digital music players and cameras, has joined DRAMs in the price free fall as consumers rein in spending.

Lee Min-hee, an analyst at Dongbu Securities in Korea, said the price of a key DRAM chip had fallen as much as 33 percent in September and October alone.

Analysts say things are not looking much better for the crucial holiday season and beyond.

"In terms of product launches, there are very few positive catalysts next year," said Yoshiharu Izumi, an analyst at JP Morgan in Tokyo.

"Emerging markets are key, but things are just going to be very tough without a recovery in the U.S. and in Europe."

South Korea's Samsung, the world's top maker of memory chips, will be the lone company managing to post a net and operating profit as a decent performance in handsets and flat screens will make up for anaemic results in semiconductors.

Analysts expect the operating profit margin at Samsung's semiconductor division to decline to the very low single digits, compared with the previous quarter's 6 percent and a far cry from the 18 percent margin posted in the year-ago period.

"An operating loss in the semiconductor division looks probable for the fourth quarter," said Lee Min-hee, an analyst at Dongbu Securities.

Profit margins at Samsung's liquid crystal display (LCD) screen and mobile phone units should be around 8 and 9 percent, respectively, as a sharp depreciation in the won currency has kept its products competitive despite the global slowdown.

But in the face of deteriorating numbers in the LCD market, slowing sales of high-end mobile phones and continued weakness in chips, some analysts say Samsung could very well post an overall loss in the final quarter of 2008 or the first quarter of 2009.

DEVASTATION

The situation is getting critical for Samsung's home rival Hynix Semiconductor Inc <000660.KS>, the world's No.2 memory chip maker, which is set to post a giant quarterly net loss of about 1 trillion won ($756 million), boosted in part by the cost of shutting down some older production lines.

Japan's Elpida Memory <6665.T>, the world's No. 3 DRAM maker, last week warned that it would post a much bigger quarterly loss than the market was expecting, while No. 2 NAND maker Toshiba Corp <6502.T> said it would post its second consecutive net loss.

In Taiwan, DRAM maker Powerchip Semiconductor Corp <5346.TWO>, a manufacturing partner of Elpida, reported a quarterly net loss of T$15 billion on Tuesday, much worse than the consensus forecast for a T$9.8 billion loss.

Cross-town rival Nanya Technology Corp <2408.TW> is also expected to rack up its sixth straight quarterly loss.

Many analysts don't expect U.S.-listed DRAM maker Qimonda <QI.N>, owned by Germany's Infineon <IFXGn.DE>, to last through the downturn despite the last-ditch sale of its stake in Taiwan's Inotera to Micron <MU.N>.

U.S.-based Micron earlier this month said quarterly losses doubled and slashed capital spending plans.

Analysts predict a recovery will not begin until the middle of 2009.

"All companies are just busy trying to survive," said Damian Thong, an analyst at Macquarie. "They want to be here when demand does return."

Lee Min-hee, an analyst at Dongbu Securities, agreed.

"Just because one company is hurting less than the other dopesn't mean it's in good shape. There will be no winners in this contest."

Below is a table of results forecasts:

COMPANY Q3 NET PROFIT (LOSS) Q3 YR AGO Oct 21 Powerchip <5346.TWO> (T$15 bln) (T$1.9 bln)* Oct 22 Nanya <2409.TW> (T$5.46 bln) (T$1.66 bln) Oct 24 Samsung <005930.KS> 1.23 trln won 2.19 trln won Oct 29 Toshiba <6502.T> (38.4 bln yen) 25.03bln yen** Oct 30 Hynix <000660.KS> (1 trln won) 168 bln won Nov 6 Elpida <6665.T> (28.8 bln yen) 3.27 bln yen** * Actual **July-September quarter