SK hynix Inc., the world's second-largest producer of memory chips, is expected to set up a joint company with US-based data storage company Seagate as part of its plan to bolster its presence in NAND flash-based solid-state drive (SSD) market that is dominated by Samsung Electronics. The joint venture will be established in January next year at the latest.
At the request of the Korea Exchange (KRX) regarding to the establishment of the joint firm with Seagate, SK Hynix said in its regulatory filing on December 14, “Although we are reviewing various plans to boost the business competitiveness of NAND flash business for the mid and long term, nothing has been confirmed yet.”
Industry sources expect that the joint venture will be formed as soon as possible because SK Hynix has a strong will to target the SSD market and the market is expected to rapidly grow next year.
When the new company is created, SK Hynix will hold a 51 percent share and Seagate to hold the remaining 49 percent. The joint venture will create a synergy by combining SK Hynix's expertise in memory chip development and Seagate's expertise in storage solutions development.
Seagate built its reputation as hard disk drive (HDD) company in the past. However, it has been forced to cooperate with NAND flash memory manufacturers as the SSD has recently emerged as the new storage trends.
SK Hynix has been also seeking for ways to increase the ratio of NAND flash chips because its dependence on DRAM products accounted for a whopping 70 percent in sales and its whole sales results faltered every time the price of DRAM memory chips was on the decrease.
SK Hynix currently ranks fourth in terms of share in the NAND market with 10.4 percent, following Samsung Electronics with 36.6 percent, Toshiba with 19.8 percent and Western Digital (WD) with 17.1 percent. It is certain that Samsung Electronics will account for more than 40 percent share in the SSD market this year based on its overwhelming technical skills, followed by WD with 11 percent, Kingston with 9 percent, Intel with 6 percent and other companies with 34 percent in total. SK Hynix is hovering just outside the top 10.
The demand for SSD used for computers, laptops and servers has been quickly growing globally. However, when the era of autonomous vehicles begins in earnest in the future, the demand for SSD used for compatibility will rise more rapidly.
According to research firm IHS on the 14th, the demand for 1 gigabit (GB) automotive NAND chips is expected to rapidly expand from 4.6 million units this year to 71.4 billion units in 2020 as more and more car components are digitalized. The demand for automotive NAND chips will be jumped by four times from 4 percent to 16 percent over the same period.
Currently, most demands for NAND products come from the infotainment sector, but it will be shifted to the autonomous driving sector, which is important to secure data storage capacity including Advanced Driver Assistance Systems (ADAS), in the future.
Industry watchers predict that the average load of automotive NAND chips will be expanded from 6.2 GB this year to 84 GB in 2020. As of this year, 14 GB of NAND chips are used in the infotainment system, while 8GB of NAND are used in the ADAS.