Samsung to surpass Intel in market valuation in a year

Samsung Electronics surprised the world in 2002 when its market value surpassed that of Sony’s. It marked Samsung’s emergence as a truly important player in the electronics industry and its brand image has since improved consistently. Now the Korean electronics giant, which is the world’s second largest semiconductor maker after Intel, is within reaching distance from the U.S. chipmaker in terms of market capitalization.

Some analysts expect Samsung to surpass Intel in market valuation in a year or so. That’s because Samsung has had a remarkably successful year since the world faced a crisis following the collapse of Lehman Brothers last September. Its market share in the global memory chip industry has risen to about 27% from 21% at the end of last year. Samsung, which is also the world’s largest TV maker and the second largest mobile phone maker, has been widening its gap with Sony in flat TVs and increasing sales in handsets even as the mobile phone industry has been suffering from an unprecedented contraction.

Little wonder Samsung’s market cap has risen to $91.5 billion from $61.8 billion a year ago. Intel’s market value at yesterday’s close was about $110 billion but it was down almost 14% from a year earlier. “It is quite likely Samsung will surpass Intel in market cap within a year, unless there’s a dramatic recovery in PC demand,” says Song Myung Sup, electronics analyst at brokerage HI Investment & Securities, forecasting an operating profit of $10.4 billion for Samsung next year, up from $7.7 billion this year and $4.7 billion last year.

Optimism for Samsung stems largely from its balanced business portfolio. Until several years ago, nearly 60% of Samsung’s profit came from its memory chip business. But next year, when analysts forecast a recovery in semiconductor demand, the memory chip business is expect to account for far below a third of Samsung’s overall profit, with handsets and TVs representing about half of the total profit. The remainder will come from its liquid-crystal panel business.