Samsung Could Pass Intel in Chip Sales

http://www.eetimes.com/document.asp?doc_id=1331676

SAN FRANCISCO—Thanks to surging memory chip prices, South Korea's Samsung Electronics Co. Ltd. could knock Intel Corp. from its familiar perch atop the chip vendor sales leaders as soon as this quarter, according to market research firm IC Insights Inc.

Samsung, the industry leader in memory chip sales, is benefiting from a precipitous rise in average selling prices (ASPs) for DRAM and NAND flash. According to IC Insights, DRAM ASPs in the first quarter of this year were 45 percent greater than in the first quarter of 2016, while NAND ASPs increased 40 percent over the same period.
If Intel's second quarter sales come in around the midpoint of the company's guidance, about $14.4 billion, Samsung could unseat Intel in the second quarter with a modest yet typical increase of 7.5 percent in chip sales from $13.9 billion in the first quarter, IC Insights noted.

Intel has been No. 1 in semiconductor sales since 1993. If memory prices hold firm through 2017, Samsung could also displace Intel as the chip sales leader for the full year, IC Insights said. Both companies are currently on pace to sell about $60 billion in semiconductors this year, the firm said.
"With the memory market still cyclical, this could indeed be a one year event," said Bill McClean, IC Insights president, in an email exchange with EE Times.
IC Insights (Scottsdale, Ariz.) predicts that memory chip prices will begin to cool in the second half of 2017. However, the firm is still projecting that the DRAM market will grow 39 percent this year and the NAND market will grow 25 percent. IC Insights also believes that the memory chip market may grow even faster than the firm has projected.

But McClean noted that memory chip vendors are dramatically increasing their capital expenditures this year to add capacity in light of the memory boom, a situation that can quickly lead to overcapacity and a rapid deflation of ASPs. Samsung spent $4.3 billion on semiconductor capex in the first quarter alone and is likely to spend more than $15 billion for the full year, a 30 percent increase over 2016. Meanwhile, rival SK Hynix plans to increase its capex by 16 percent this year, McClean said.
"When they catch up in capacity, memory prices could retreat quite quickly," McClean said.