Thursday, April 9, 2020
Samsung Electronics Puts 2nd Plant in Xian into Operation as Planned
To Further Widen Gap with Competitors
Samsung Electronics Puts 2nd Plant in Xian into Operation as Planned
  • By Michael Herh
  • March 18, 2020, 10:08
Share articles

Samsung Electronics’ Semiconductor Complex in Xian, China

Samsung Electronics has reportedly started to operate its second semiconductor plant in Xian, China, as planned, defying concerns about operation disruptions due to the COVID-19 outbreak.

The company held a ceremony at its Xian complex on March 10 to mark a product shipment following the completion of the first phase of investment. The new line will roll out 5th-generation V-NAND flashes of a 3-D vertical structure with 90 or more layers.

In August 2017, Samsung Electronics announced that it will make a first-phase investment of US$7 billion in the second plant in the Xian complex to boost its output of NAND flashes from 20,000 wafers month to 65,000 wafers. The first phase of investment was completed in March and the company plans to make a second-phase investment of US$8 billion. Samsung Electronics' investment in the second plant in Xian totals US$15 billion. When the second-phase investment is completed, the second Xian plant will be able to process over 130,000 wafers per month.

Samsung Electronics' market share in the global NAND flash market was 33.5 percent in the third quarter of last year, about double the 18.7 percent of second-ranked KIOXIA (formerly Toshiba Memory), market researcher TrendForce said. Samsung Electronics reportedly made profits even in 2019 when the price of a 128 Gb 16Gx8 MLC NAND flash dropped to US$3.93, which was below the break-even point (BEP) of other companies.

However, other companies have been in hot pursuit of Samsung Electronics. KIOXIA’s market share increased 0.6 percentage point from the previous quarter and Intel, which dominated the server and PC CPU market, recorded a 10.9 percent market share, up 2.2 percentage points from the previous quarter. In particular, prices of NAND flashes have been on the rise. The price of a 128 Gb 16Gx8 MLC NAND flash reached US$4.56 in February, an increase of 3.17 percent from the end of 2019. The price uptrend may be one reason Samsung Electronics has decided to start the operation of the plant.

China's attempt to increase self-sufficiency in NAND flashes by fostering Chinese semiconductor companies may be another reason. Yangtze Memory Technologies Co. (YMTC) has been producing 64-layer 3D NAND flashes from the first quarter of last year, with output reaching 5,000 wafers per month. The company will expand NAND flash production to 60,000 sheets of wafer per month by the end of this year. Compared to Samsung's flagship 6th-generation NAND flashes, its technology is about three or four years behind, but is good enough to replace demand for NAND flashes for PCs and some entry-level IT products. YMTC also plans to introduce 128-layer NAND flashes this year, so if it succeeds in mass-producing it, Samsung's position in China may be weakened.

The problem is the spread of the epidemic which has grown into a terrible pandemic. In February, mobile phone shipments in China dropped 56 percent on year to 6384,000 units amid a sharp drop in demand for smartphones.