Widening Gap with Chinese Semiconductor Companies
Samsung Electronics has increased semiconductor output by about 40 percent when measured in terms of data unit, while maintaining its wafer input at a level similar to that of the previous year.
Samsung Electronics spent 1.86 trillion won for wafer purchases in 2019. In the preceding year, it spent 1.66 trillion won to purchase wafers. Considering that the price of new wafers increased by 12 percent in 2019 on year, there was virtually no change in the amount of wafer input during the two years.
On the other hand, the amount of semiconductors produced by Samsung Electronics in 2019 was 889 billion giga bits (Gb), up 39 percent from 711 billion Gb in 2018. Samsung Electronics increased semiconductor supply and increased profitability through process improvement rather than facility expansion, which requires an increased wafer input.
Samsung Electronics’ investment in the semiconductor sector declined to 23.72 trillion won in 2018 and 22.56 trillion won in 2019 after peaking at 27.35 trillion won in 2017. But its productivity has increased significantly. In 2020, its plan is to respond flexibly to changes in the semiconductor market with the focus on a process improvement.
Samsung Electronics is also accelerating its semiconductor micro-fabrication process. In the case of DRAMs, the chipmaker is working to convert its first-generation 10-nm (1x) process to a second-generation (1y) or third-generation (1z) one. As a DRAM production process is upgraded, the number of semiconductor chips produced with one wafer increases by 20 to 30 percent. In particular, in the case of mass production of 4th-generation 10-nm (1a) DRAMs by applying the extreme ultraviolet (EUV) process, it is possible to double production of semiconductors per wafer compared to a 1x process.
Samsung Electronics also succeeded in mass-producing sixth-generation (1xx-layer) NAND flashes in 2019. Sixth-generation NAND flashes have a smaller chip size than that of fifth-generation (9x-layer) products, and their productivity per wafer is about 20 percent higher than that of fifth-generation (9x-layer) products. Samsung Electronics forecast that NAND flashes’ bit gross (growth of semiconductor production per bit unit) will also be within 30 percent in 2020 so semiconductor shipments in terms of data are expected to increase further.
Some semiconductor industry experts say that China’s big bet on the semiconductor industry will not virtually pay off due to Samsung's overwhelming cost competitiveness. Recently, YMTC announced that it will mass-produce 128-layer NAND flashes in 2020, but they significantly lag behind Samsung's sixth-generation products. Samsung Electronics' sixth-generation products reportedly applied channel hole etching technology that drills over 100 cells at one time through an etching process, while YMTC applied a method of stacking 64-layer NAND flashes on top of 64-layer NAND flashes, which is inferior technology compared to that of Samsung. Currently, Samsung Electronics is the only chipmaker where mass production of nine-layer or higher 3D NAND flashes can be mass-produced through one etching process.