Expansion of DRAM Production
Samsung Electronics will invest about 10 trillion won (US$8.7 billion) in Hwaseong Campus in Gyeonggi Province, South Korea to build a new line to produce memory DRAMs. By coping with the soaring demand, the company will maintain the world's number one position in the memory semiconductor sector. As a result, 18nm or more advanced DRAMs will be produced from the new line in Hwaseong in about two years.
According to the semiconductor industry on March 14, Samsung Electronics is currently working on an initial task after assembling a taskforce team for the expansion of new DRAM lines at idle sites in its Hwaseong plant.
Samsung Electronics plans to produce NAND flash exclusively at the plants in Xian of China, Pyeongtaek and partially in Hwaseong, and roll out DRAMs in most of current and new lines at the Hwaseong plant. System semiconductors (system LSI) will be produced in its plants in Giheung of Korea, Austin of the US and Hwaseong of Korea (part of the plant).
"Considering the construction period of about two years, the speed of company’s research and development (R&D) and the yield rate of process conversion, it is not clear whether products from the new line at Hwaseong pant will be 18nm DRAMs, which are mass produced currently, or more advanced products,” a Samsung official explained.
In fact, the semiconductor market is changing rapidly every month, and the choice of products to be manufactured is often determined at the completion of a plant. A good example is Line 17 of the Hwaseong plant which was intended to produce system semiconductors in the first place but is currently manufacturing memory semiconductors. Samsung Electronics recently decided to produce NAND flash at the Pyeongtaek plant which will be put into operation in June of this year only after the construction of the factory is completed.
Samsung Electronics decided to build a new DRAM line in order to generate maximum profit in response to soaring demand.
"The profit margin of Samsung DRAMs towers over the middle of 40%," said a representative of Samsung Electronics. "Even though their prices eclipse those of other companies’ products, demand is exceeding supply now as their quality stand out.” In the global DRAM market, Samsung Electronics enjoyed a dominant position while recording a share of 48.0% last year.
As its technological supremacy strategy paid off based on its technological prowess, Samsung Electronics' DS (device and semiconductor) Division exceeded 6 trillion won (US$5.2 billion), a record high, in operating profit in the fourth quarter of last year. Samsung Electronics' annual operating profit of 2017 is expected to exceed 50 trillion won (US$4.3 billion) and its DS Division is expected to post 25 to 30 trillion won (US$21 billion to US$26 billion), more than the half of the total according to industry sources.