Paradigm Shift?
A seismic change is being made in the semiconductor business structure of Samsung Electronics, which has historically focused on memory semiconductors. As the slump in the memory industry continues, Samsung Electronics’ quarterly sales in the foundry business, being fostered as a new growth driver, overtook those of its NAND flash and came close to DRAM, which played a big role in the Korean tech giant’s chip sales performance.
Samsung Electronics’ foundry business sales hit 7,016.4 billion won (US$5.391 billion) in the fourth quarter of last year, said market research firm TrendForce on March 19. Compared to DRAM sales of 7,210.3 billion won, or US$5.54 billion, the gap was less than 200 billion won. This marks the first time that the its foundry business’ sales figure resembled its DRAM business, which has shown an overwhelming presence in the Korean chipmaker’s semiconductor business.
In the third quarter of last year alone, the gap between the company’s DRAM sales (9,634.8 billion won) and foundry sales (7,270.4 billion won) stood at 2,360 billion won.
Samsung Electronics’ foundry business has already surpassed its NAND flash business, another kind of memory semiconductor, in terms of sales. In the third quarter of last year, the chipmaker’s NAND flash sales were tallied at 5,609.4 billion won (US$4.3 billion), allowing the foundry business to get ahead of the NAND flash business. In the fourth quarter, NAND flash sales came in at only 4,557.1 billion won (US$3.48 billion), widening the gap between the two sides.
DRAM and NAND flash have served as a major cash cow for Samsung Electronics, which leads the world memory market as the number one player in sales. Samsung Electronics accounts for 50 percent and 30 percent of the global DRAM and NAND flash markets, respectively. Analysts say that memory prices plummeted due to a contraction in global demand for memory in the second half of last year, which also affected Samsung Electronics’ sales structure. In the fourth quarter of last year, the average selling price (ASP) of DRAM and NAND flash shrank by 23 percent and 28 percent, respectively, compared to the previous quarter.
Like this, memory semiconductors are sensitive to market conditions. But the foundry business produces customized chips. So Samsung Electronics’ foundry business is maintaining relatively stable performances. Its foundry business also showed relatively little fluctuation in earnings. In the fourth quarter of 2022, sales of the top 10 major foundry companies in the world decreased by 4.7 percent from the previous quarter, but Samsung Electronics posted a decrease of only 3.5 percent. Its market share also rebounded slightly. Its market share in 2022 decreased from 16.4 percent in the second quarter to 15.5 percent in the third quarter, but increased by 0.3 percentage points to 15.8 percent in the fourth quarter.
Some industry insiders are predicting that 2023 may be the first year that Samsung Electronics’ foundry sales exceed its DRAM sales. According to market research firm Omdia, Samsung Electronics’ expected annual DRAM sales in 2023 are between US$17 billion and US$18 billion and its expected annual foundry sales between US$20 billion and US$25 billion. According to this prediction, the foundry business will rise to the top in the sales rankings among Samsung Electronics’ semiconductor businesses for the first time.