South Korean semiconductor businesses are seeking to take the initiative in the 3D NAND flash market by increasing investment in facilities this year by approximately 30 percent compared to last year. This is to secure technological advantage over other competitors with large preemptive investments.
According to the Semiconductor Equipment and Materials International (SEMI) on Feb. 16, Samsung Electronics and SK Hynix are planning to inject US$14 billion (15.97 trillion won) into semiconductor facilities this year. The figure is increased by 27.3 percent from US$11 billion (12.55 trilion won) of the two companies’ investment in semiconductor facilities last year. In particular, Samsung Electronics is expected to make a US$10 billion (11.41 trillion won) investment in facilities, up 25 percent from a year ago. SK Hynix has announced its plans to make an investment of 7 trillion won (US$6.13 billion) this year and will spend about US$4 billion (4.6 trillion won) on semiconductor facilities alone.
The size of investment by South Korean semiconductor companies is the largest in the world. Intel Corp., a leading system semiconductor producer based in the U.S., is also planning to invest US$5 billion (5.71 trillion won), up 67 percent from a year earlier, in semiconductor facilities this year, but most chipmakers are expected to reduce their investments in facilities. Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest foundry, U.S. semiconductor manufacturer Micron Technology and Semiconductor Manufacturing International Corp (SMIC), China's largest contract chip maker, cut back on their investments by hundreds of millions of dollars.
Samsung Electronics and SK Hynix plan to gradually increase a portion of sales of 3D NAND flash chips, rather than DRAM, with such aggressive investments. The ratio of DRAM to NAND flash chips in Samsung Electronics’ memory business is six to four, while that of SK Hynix is seven to three. It shows that the two companies still have a business structure weighted towards DRAMs. However, they are planning to increase the ratio of high value-added 3D NAND flash chips by nearly half for higher profitability to differentiate themselves from other companies. With such strategy, the global investment in NAND flash will grow more than 14 percent from US$14 billion (15.97 trillion won) last year to US$16 billion (18.26 trillion won) this year.
Samsung Electronics has been already mass producing a 64-layer 3D NAND chip from last year and it is also planning to release a 512Gb 64-layer 3D NAND chip in the first half of this year. SK Hynix will also consistently expand 48-layer 3D NAND chip production and start mass producing a 72-layer 3D NAND chip from the second half of the year at the same time. Accordingly, the SEMI expected that South Korea’s semiconductor industry’s share in the DRAM and NAND flash market will reach more than 70 percent and 45 percent, respectively.