Daredevil Production
SK Hynix is reportedly planning to increase the production weight of its 25nm DRAM to around 70 percent by the fourth quarter of this year. The decision seems to reflect the company's willingness to narrow the gap with Samsung Electronics in micro-processing.
According to industry sources on Sept. 11, semiconductor e-commerce site DRAMeXchange recently predicted that SK Hynix would increase the production rate of 25nm wafers to around 70 percent by Q4 2014. DRAMeXchange explained, “SK Hynix has tried hard to improve the manufacturing process of 25nm DRAM, overcoming problems related to production yield.” The e-commerce site added, “The manufacturing process will be in a mature stage during the fourth quarter of this year.”
In addition, Micron Technology, the world's third largest semiconductor memory maker, is also expected to see the proportion of 25nm wafers in total DRAM production reach nearly 50 percent within the year.
However, Samsung Electronics reportedly plans to mass produce 20nm DRAM as its flagship product starting next year. Therefore, SK Hynix is apparently beyond its capacity to overtake Samsung. An industry source said, “Early next year, the weight of 20nm DRAM for Samsung is likely to increase to double digits, which will become one of the company's major products.” The source added, “The production ratio is going to reach more than 30 percent in the first half of next year.”
Industry analysts are saying that the continued competition between semiconductor manufacturers in micro-processing, even though they are prospering, is largely attributable to their preparation for a game of chicken and their intention to secure profitability.
The profitability of 20nm class mobile DRAM is better than PC DRAM, and the demand for DRAM for PCs is greater than that of mobile DRAM. Hence, the market could be reorganized in a way that would be difficult for companies to survive in the end without a competitive advantage in micro-processing.
An industry source remarked, “Micro-processing is not simply a matter of productivity. There is also a big difference in performance, like power consumption and processing speed.” The source added, “As the difference in price between 30nm and 20nm class DRAM is smaller, some companies will inevitably fall behind in the competition. Ultimately, a competitive advantage in micro-processing will determine companies' survival in the market.”
According to the analyses of market research firms, the production rate of 20nm class DRAM for Samsung is nearly twice as high as that of latecomers like SK Hynix or Micron. If they cannot reduce the gap, they may find themselves in a disadvantageous situation where they cannot respond to increased production of Samsung or a reduction in demand.
Based on a scenario like this, SK Hynix is also augmenting the weight of 20nm class DRAM. Once its new M14 facility commences full operations in the latter half of 2015, the production rate is expected to further increase.
Nevertheless, experts believe that it won't be easy for the chipmaker to narrow the gap between Samsung unless it changes the frame with a new technology like Through Silicon Via (TSV) or the method to make V-NAND flash memory chips, which is different from micro-processing.