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Supply Glut Looming Large in Semiconductor Market
Too Many Chips
Supply Glut Looming Large in Semiconductor Market
  • By Cho Jin-young
  • July 21, 2015, 05:45
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The global semiconductor market is expected to slow down for a couple of years due to the sluggish demand for PCs and smartphones. Under the circumstances, Samsung Electronics and SK Hynix are increasing their DRAM supply volumes, signaling a supply glut from the second half of this year.

According to industry sources, Samsung Electronics is currently producing 20-nm class DRAM in quantity in its Line 17 fab located in Hwaseong City, Gyeonggi Province. At present, an average of 30,000 to 40,000 wafers are input into the fab a month, equivalent to 10 percent of Samsung Electronics’ total DRAM production. The company is planning to step up the volume until next year. At first, it was going to make system-on-chip products there, but changed its plan due to the presence of Chinese and Taiwanese fables firms in the application processor market.

SK Hynix produces DRAM in its M14 fab in Icheon City, Gyeonggi Province, from the third quarter of this year, too. The M14 fab, which is scheduled to take the place of its DRAM-producing M10, is expected to have a monthly capacity of 15,000 wafers at the end of this year.

In the meantime, the global DRAM market is facing oversupply. Market research firm Gartner recently forecast that the semiconductor market would record a growth of 2.2 percent this year and 1.3 percent in 2016, while the size of the IoT semiconductor segment would be limited to US$43.5 billion, 10 percent of the market, in 2020 to fall short of expectations.

The long-term outlook is even worse. Samsung Electronics’ facilities in Pyeongtaek City, Gyeonggi Province that will be put into operation in 2017 are likely to become the largest memory manufacturing plant in the world, and Chinese companies are expected to become fully operational in the global memory semiconductor industry within five years. Tsinghua Unigroup recently declared that it would take over Micron Technology to set foot in the industry.

“The Chinese government is planning to invest US$20 billion in the sector so that Chinese firms can have a greater presence there,” Gartner explained, adding, “Although this itself is enough to jolt the global market, it seems that the total investment will be raised up to US$100 billion by private-sector investors in the end.”