Samsung facility investment, focus on process conversion… It seems different from the past
As the memory semiconductor market enters a cold season following the global economic downturn, there is concern that the semiconductor ‘chicken game’ could be replayed as Samsung Electronics, the No .
A game of chicken is a game where two vehicles run facing each other and who turns the steering wheel decides the winner to avoid them.
The industry often compares bleeding edge competition that accelerates facility expansion without regard to profitability to a game of chicken.
◇ Confidence in cost competitiveness of Samsung Electronics “There is no artificial production cut”… Other companies cut production one after another
In the actual DRAM market, there has been a game of chicken in the past.
As DRAM prices plunged after extreme competition, Germany’s Qimonda in 2009 and Japan’s Elpida in 2010 disappeared from the main stage of the DRAM industry.
Meanwhile, in the DRAM market, Samsung Electronics, SK Hynix, and Micron have an oligopoly with more than 95% of the market share.
A Samsung Electronics conference call ‘called’ the game of chicken again.
In an earnings conference call on the 26th, Samsung Electronics made it clear that it would not reduce investment in memory semiconductors.
Jinman Han, vice president of Samsung Electronics’ memory business division, said, “The basic position of not considering artificial production outages has not changed.”
This is in contrast to rivals such as SK Hynix and Micron, which announced reductions in investment or production cuts.
With this in mind, concerns began to emerge in the industry that the game of chicken could be happening again.
SK Hynix’s stock price plunged as market unrest increased.
This is because, in a situation where semiconductor prices are plummeting due to shrinking demand and excess inventory, if there is no production cut, the decline in semiconductor prices will inevitably accelerate.
In particular, concerns are high in the NAND flash market.
The reason why a game of chicken is very likely to develop in the NAND sector is the structure of the market.
In the NAND market, while Samsung Electronics maintains the No. 1 position, SK Hynix acquired Solidigm (formerly Intel’s NAND division) and rose to second place in the market, but the gap in market share between the companies is not is big.
According to market research company Omdia, in the second quarter of this year, Samsung Electronics’ NAND market share was 33.3% and SK Hynix’s was 20.4%.
It was followed by Japan’s Kioxia (16.0%) and the US’s Western Digital and Micron (13.0% each).
However, there are also observations that the game of chicken as in the past will not happen.
The reason why Samsung Electronics’ facility investment does not decrease is not because more production is taking place, but for technological investment and process promotion, and due to the nature of the semiconductor industry, it is inevitable that the production capacity has reduced during the conversion process.
Hwang Min-seong, Tech Team Leader of Samsung Securities, said, “Samsung Electronics introduced extreme ultraviolet (EUV) faster than its competitors, but had difficulties in conversion and securing products. ) is inevitable.”
“The reason Samsung Electronics’ facility investment is not decreasing is because technology investment is increasing,” he said.
In fact, Vice President Han Jin-man said in a conference call, “This year’s or next year’s capex (equipment investment) is not directly related to next year’s parts production. It’s difficult,” he added.
Some analysts predict that Samsung Electronics will further consolidate its position in the midst of a crisis.
In a situation where competitors are cutting production for profitability, if Samsung Electronics maintains its supply with higher cost competitiveness, its market dominance can be further strengthened.
There is also an evaluation that Samsung Electronics is holding a ‘flower festival’.
Min-sook Chae, a researcher at Korea Investment & Securities, said, “The slump in the memory semiconductor industry will continue in the fourth quarter, but the drop in profits will be significantly less than competitors’ profits thanks to the cost competitiveness it did.
◇ Number of high added value products such as DDR5
Attention is also focused on the strategy to overcome the cold season in semiconductors.
Samsung Electronics and SK Hynix are working hard to make breakthroughs that focus on high value-added products.
SK Hynix’s gain rate is DDR5.
In an earnings conference call, SK hynix said, “The DDR5 market is expected to develop seriously next year. I will make sure not,” he said.
Samsung Electronics also plans to secure sustainable market leadership in response to the growing demand for new interfaces such as DDR5 and LPDDR5X and high-capacity products.
He also decided to focus his capabilities on automotive semiconductors.
Vice President Han explained, “The situation of the blacksmith market is not easy, but at times like these, it is more important to discover new sources of demand and prepare for it.”
He also predicted that “after 2030, automotive will increase to the top three applications along with servers and mobile phones.”
Earlier this month, at the ‘Samsung Tech Day 2022’ event held in Silicon Valley, USA, Samsung Electronics announced its goal of achieving No.
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