Samsung Electronics: 'Chip Business Will Continue to Grow in H2 and Next Year'

Will it quell the speculation that the semiconductor business has already reached its peak?

Following SK Hynix, Samsung Electronics also dismissed the speculation that the ongoing semiconductor super cycle might have already reached its peak. Samsung Electronics expects stable demand for both server DRAMs and mobile DRAMs until next year as well as in the second half of this year. The company also refuted some predictions that it would turn its direction from profitability-centered strategy into increasing its market share by raising supply.

"We entered the third quarter, when the demand is high, and we expect strong demand from the data center and mobile markets," said, Jeon Se-won, executive director of Samsung Electronics' memory division. “Despite chipmakers’ efforts to increase supply, it is still not easy to meet the demand, so the positive situation will continue."

The company expected that there will be steady demand for DRAMs for servers. It is because global information technology (IT) companies such as Google, Microsoft and Amazon are planning to launch new cloud services in the second half of the year. The company explained that in addition to American companies, there is a growing demand for semiconductors for data centers in China.

Unlike DRAMs, the price of NAND flash fell as supply increased. However, Samsung explains that the price drop in turn increased demand, boosting the use of solid state drives (SSDs). Recently, demand for high-capacity products such as 64GB DRAMs and 8TB SSDs is on the rise.

Samsung Electronics is also optimistic about the outlook of DRAM supply and demand next year. It is because in terms of supply, semiconductor producers are struggling with the transition to 10-nanometer process, and as the process technology improves, the entry barriers become higher as large capital is needed.

"The market will remain stable next year," said executive director Jeon. "In the mid to long term, the trend toward high-performance and high-capacity servers will continue amid diffusion of artificial intelligence (AI) and 5G (fifth generation mobile communication).”

Regarding the market’s speculation that the company switched from a profitability-oriented strategy to a focus on market share, Jeon said, “Our basic strategy is not focused on short-term growth but mid- to long-term profitability enhancement. This strategy has not changed. At the end of the year, 10-nanometer DRAM products will account for more than 70% of the total. We will continue to develop the best technology in the industry by developing new products including 1Z nano DRAMs.”