Samsung Electronics <005930.KS>, the world's top maker of memory chips and LCD screens, gave a robust outlook, signaling bigger players are set to further widen the gap over smaller firms in a tech sector recovery.

The South Korean company, along with home rival LG Electronics <066570.KS>, has made a spectacular turnaround this year, grabbing market share from the likes of Sony <6758.T>, which reported a loss for the fourth straight quarter on Friday.

I don't see any risk in Samsung's competitiveness and there's zero chance supplies will rise significantly, said Song Myung-sup, an analyst at HI Investment & Securities. But the macroeconomy remains a factor -- demand may weaken once stimulus plans are removed.

Samsung reported a record quarterly net profit on Friday thanks to resurgent sales and forecast a strong 2010 even as analysts cited risks of a fast recovering won and increased marketing spending.

Forecast-beating results from both Samsung and LG have come in the backdrop of South Korea's economy growing the most in 7- years in the third quarter.

Samsung shares ended up 0.7 percent in the broader market <.KS11> down 0.3 percent. The stock, South Korea's biggest valued at $90 billion, have jumped 59 percent this year through Thursday, beating a 41 percent gain in the market, although it was down 13 percent from a record high struck last month.

Samsung's 2010 net profit is set to rise to 11.59 trillion won from 8.95 trillion won this year, according to Thomson Reuters I/B/E/S. Two months ago, the 2010 consensus forecast was at 10.36 trillion won.

Samsung expects the global market for personal computers and handsets to resume double-digit percent growth next year and LCD TV sales to rise nearly 20 percent.

We expect the global economic recovery to drive demand growth of most IT and consumer electric products...we are cautiously forecasting our 2010 profitability may improve that of 2009, said Samsung's head of investor relations, Robert Yi.

Still, the risk remains Samsung and LG may be hit by a firming won currency. Samsung said its fourth quarter earnings could decline due to the won's impact and marketing expenses.

Samsung's profit has likely peaked in the third quarter and will start to ease from the fourth quarter, with falling LCD prices and demand leading the way, said Lee Min-hee, a Dongbu Securities analyst.

I expect Samsung to boost investment from early next year and this increased spending, if revenue doesn't pick up over the near term, could drag on profits for the time being.

For an earnings graphic, click: http://graphics.thomsonreuters.com/109/KR_SMSG1009.gif

For Samsung's statement, click: http://r.reuters.com/pum76f

CHIP MARGINS SOAR

The recovery in Samsung is most evident in its flagship memory chip business, which posted an operating profit margin of 15 percent on a consolidated basis, surging from 4 percent in the second quarter. Several analysts expect the unit to post margins above 20 percent in 2010.

Samsung chip business head Kwon Oh-hyun on Wednesday expected slight shortages in both dynamic random access memory (DRAM) and NAND flash memory chips next year.

Samsung said it would invest more than 5.5 trillion won ($4.64 billion) in memory chips and around 3 trillion won in the liquid crystal display (LCD) business in 2010, on a consolidated basis, after investing some 7 trillion won company-wide in 2009.

In mobile phones, where Samsung ranks behind only Nokia , profit margin at the telecom unit remained flat at 10 percent despite increased marketing costs and fewer subsidies from mobile operators. Samsung said its global market share in handsets rose over 20 percent for the first time, estimated at 20.8 percent.

Samsung's July-September net profit rose to 3.72 trillion won ($3.14 billion), beating an average forecast for 3.34 trillion won from analysts polled by Thomson Reuters I/B/E/S. This topped its previous record quarterly net profit of 3.14 trillion won in the first quarter of 2004.

(Additional reporting by Kim Yeon-hee and Yoo Choon-sik; Editing by Jonathan Hopfner and Anshuman Daga)

South Korea Electronics Samsung LG electronics