Samsung Electronics Co. has officially
announced to reduce its investment in DRAM this year. Until now, there
have been rumors that major semiconductor firms, including Samsung
Electronics, will reduce the DRAM investment. However, it is the first
time for Samsung Electronics to directly reveal its DRAM investment
reduction plans.
According to Samsung Electronics and investment banking industry
sources on June 20, Samsung Electronics held investor relations (IR)
events for institutional investors in the U.S. and Korea last week and
this week.
At the IR event held in New York and Boston from the 14th to 16th
(local time), investors paid attention to 3D NAND flash, organic
light-emitting diode (OLED) and smartphone sales performance. In
particular, Samsung Electronics revealed its plan to reduce the
investment in DRAM at the event for the first time this year.
The company’s NAND flash business is a cash cow which can make up for
sluggish sales in the DRAM sector and boost total sales in the
semiconductor sector. Samsung Electronics significantly increased
margins in the NAND flash sector this year through steady cost
reduction. Its operating margins in the NAND flash sector will grow from
17 percent last year to 25 percent this year.
As global NAND flash manufacturers, such as Intel and SK Hynix, have
recently increased the investment in 3D NAND flash production
facilities, Samsung Electronics is expected to expand the investment in
its production facilities to lose its competitors.
Considering the fact that the NAND flash memory capacity of its new
smartphones to be released in the second half of the year will be
doubled, the construction of its new NAND flash production lines is
inevitable.
Samsung
Electronics is preparing for the winner-take-all system in the NAND
market. The company has the V-NAND flash production lines in Xi'an,
China, and it is considering using the 17th line at the Hwaseong plant
as the 3D NAND-only line. Most industry watchers believe that it will
produce 3D NAND flash chips at its plant in Pyeongtaek, which will start
operation in the middle of next year.
An official from Samsung Electronics said, “We haven’t decided what
to produce at the Pyeongtaek plant yet. Since there is a lot of
volatility in the semiconductor market, we will watch market conditions
until the first half of next year and decide what to manufacture at the
last minute.”
Samsung Electronics ranked top with a 31.6 percent share in the NAND
flash market as of the end of last year, followed by Toshiba with 18.3
percent, SanDisk with 17.6 percent, Micron with 13.4 percent, SK Hynix
with 10.7 percent, Intel with 7.5 percent, Macronix with 0.7 percent and
Powerchip with 0.2 percent. The NAND flash market is relatively crowded
with competitors than the DRAM market.
Samsung Electronics said, “The demand of solid-state drive (SSD) is
increasing, based on 3D NAND flash chips for enterprise (server and
storage). Also, the demand of SSD is rapidly changing as the price
difference with hard disk drive (HDD) is decreasing due to cost
reduction from technology improvement.” Investors had low expectations
for 3D NAND flash until last year but they are welcoming such changes
this year.
In addition, they were interested in OLED investment and flexible
display technology. Lee Sae-chul, an analyst at NH Investment, said,
“Investors expects that smartphones using flexible OLED displays can be a
game changer when they can support tablet functions at the same time.
They had particularly higher expectations for foldable smartphones than
expected.”
As Samsung Electronics seeks to maximize the profitability in the
smartphone market, which has entered the maturity, rather than to expand
its market share, investors in the U.S. positively rated the
performance improvement in the IT and mobile (IM) division.
Meanwhile, Samsung Electronics focused on the next-generation
Internet of Things platform ARTIK, quantum dot and semiconductor
packaging at the IR event for institutional investors held at Conrad
Hotel in Yeouido, Seoul.
http://www.businesskorea.co.kr/english/news/industry/15044-reduction-dram-investment-samsung-electronics-focus-nand-flash
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