The rapidly growing virtual reality (VR) and augmented reality (AR) industry is becoming a new growth engine in the semiconductor market. "According to Silicon Valley based tech advisor Digi-Capital, the worldwide VR and AR market is expected to reach US$120 billion in 2020."
Industry sources say that the expansion of the VR and AR market is primarily to increase the demand of NAND flash which keeps storing data when a device’s DRAM and power are shut off. To realize 3D VR contents through VR devices, like the Gear VR, requires a lot of memory. Currently, smartphones provide such contents. However, there is still a limit since some VR contents have a very large capacity. The memory capacity is an important issue for VR contents to the extent that the Gear VR features an external storage memory card slot.
What’s more important is the capacity of VR servers. For instance, 300 hours of video is uploaded to YouTube each minute around the world and a large server capacity and storage device are necessary to store it. Likewise, a storage device is needed when an individual tries to store or transmit VR contents taken with a 360-degree camera to a server in real time. According to market research firm IHS, the average capacity of NAND flash memory equipped with smartphones will increase from 28.9GB this year to 94.3GB in 2020.
Smart cars will also expand the scope of semiconductors. Semiconductors are already being used to produce advanced Driver Assistance Systems (ADAS). However, the demand of semiconductors will grow even further in the future when the era of smart cars comes in earnest. This is because not only DRAM but also various semiconductors for image sensors are essential to manufacture autonomous vehicles. IHS expects that the automotive semiconductor market will grow from US$30.2 billion (33.7 trillion won) this year to US$39.7 billion (44.31 trillion won) in 2021, reaching almost US$40 billion (44.64 trillion won).
In addition, new markets such as robots and bio-chips related to health care are rapidly being set up.
Samsung Electronics announced its plan to establish its VR and automotive semiconductor production lines this year, while SK Hynix expressed its will to focus on self-driving cars and ADAS which have the most opportunities for future growth.