Wednesday, October 23, 2019
Samsung Electronics' Non-memory Semiconductor Business Strategy Pivots on AP, IoT
Samsung's Non-memory Strategy Taking Shape
Samsung Electronics' Non-memory Semiconductor Business Strategy Pivots on AP, IoT
  • By Kim Eun-jin
  • October 2, 2019, 13:50
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Samsung Electronics’ system semiconductor promotion strategy focuses on strengthening mobile application processors (APs) and memory chips for the Internet of Things (IoT).

Samsung Electronics Co.’s non-memory semiconductor investment strategy “Vision 2030” is taking concrete shape. The company announced in April that it would invest 133 trillion won (US$110.51 billion) in non-memory semiconductors by 2030 to become No. 1 in the global system semiconductor market.

The company has taken a series of initiatives over the past five months to accelerate the growth of its non-memory business. They included plans to develop a 3 nanometer process, invest in neural processing unit (NPU), and strengthen cooperation with U.S.-based firm AMD in the GPU sector. It also released the industry’s first 0.7 ㎛-pixel mobile image sensor.

The global system semiconductor market is estimated at US$321.20 billion (386.72 trillion won) this year, twice as big as the memory semiconductor market which is worth US$162.50 billion (195.68 trillion won). Samsung Electronics needs to increase its share of the system semiconductor market to reduce its dependence on memory semiconductors, which account for 70 percent of its semiconductor sales.

Samsung Electronics’ system semiconductor promotion strategy focuses mainly on strengthening mobile application processors (APs) and memory chips for the Internet of Things (IoT), including cars, according to semiconductor industry sources on Oct. 1. The company is planning to integrate these capacities with its foundry sector, which is the second largest in the industry, to take the lead in the system semiconductor market by 2030.

Samsung Electronics unveiled the Exynos 980, the industry's first chip that integrates a 5G modem and an AP, in its bid to narrow the gap with Qualcomm. In particular, the company is expected to use its own graphics processing unit (GPU) on the mobile AP, instead of the one based on the intellectual property of U.K-based firm ARM, and improve graphics processing functions in two years through the partnership with AMD.

In addition, Samsung Electronics is planning to use an NPU in its mobile AP to improve the artificial intelligence (AI) processing speeds and increase the number of experts and researchers related to deep learning by 10 times. The company will widen the gap with Huawei by using its influence in the smartphone market and advancing technologies. The Chinese firm has been raising its presence in the market by using an NPU in its Kirin mobile AP series.

Samsung Electronics is accelerating its push into the auto semiconductor market based on Harman acquired with an investment of 8 trillion won (US$6.64 billion). Auto semiconductors are subdivided into communications and power control, and NXP of the Netherlands, Infineon of Germany and Renesas of Japan are leading the market. Samsung Electronics is adjusting its growth strategy based on its auto semiconductor brand “Exynos Auto” and image sensor “ISOCELL Auto.” Some experts said the company will pursue “super gap” strategy through acquisition because auto memory chips require a higher level of durability and safety than mobile APs.

Samsung Electronics is expected to establish its system semiconductor growth strategy for the long term. System semiconductors are largely divided into microcomponents based on CPU, logic IC based on APs, analogue IC and optics semiconductor markets. Intel leads the CPU market, while Qualcomm and Texas Instruments are the number one leading companies in the mobile AP and analogue IC markets, respectively. Furthermore, other major firms are likely to keep Samsung Electronics which is promoting both semiconductor design and foundry businesses at the same time in check. These will make it difficult for Samsung Electronics to promote its system semiconductor business in the short term.