Technological Leadership Weakening

Samsung Vice Chairman Lee Jae-yong (left) Check out a semiconductor packaging line at the company’s Onyang Plant on July 30, 2020.

The Memory Department of the Device Solution Division at Samsung Electronics has plenty to ponder these days. The biggest issue for the department concerns investment in DRAM facilities. Samsung Electronics is focusing investment on the foundry business and AI semiconductors, which were designated as the next growth drivers. In comparison, the chipmaker mapped out a relatively conservative investment plan for the memory business. However, aggressive investment in advanced memories by competitors such as Micron Technology of the U.S. is shaking Samsung Electronics' status as the No. 1 memory maker in the world.

Samsung Electronics has maintained its dominance in the global memory (DRAM and NAND) market for 29 years. However, its market share has been on a steady decline in recent years. Although the company’s share in the DRAM market stood at 48 percent in 2016, it had continued to drop for the following five years and fell to 43.1 percent in 2020. It further dropped to 42.1 percent in the fourth quarter of 2020, according to TrendForce.

It goes the same for NAND flashes. Its NAND market share exceeded 40 percent in 2017 but has since continued to fall, posting 33.4 percent in the fourth quarter of 2020. Furthermore, in November 2020, Micron Technology launched the world's first 3D 7th-generation V NAND flashes with 176 or more layers. Samsung Electronics is currently focusing on 6th-generation V NAND flashes. Its Memory Department is trying hard to move up the commercialization of the 7th generation NAND flashes, which is scheduled for the second half of 2021.

Industry experts say that Samsung Electronics' technological leadership is weakening as competitors are quickly improving their technologies. Micron is mass-producing 10-nanometer DRAMs, which are equivalent to Samsung Electronics’ products. The U.S. rival is also developing next-generation DRAMs in the low 10-nanometer range using state-of-the-art EUV lithography equipment. Its goal is to produce EUV DRAMs during the first half of 2021.

Moreover, Micron is interested in acquiring Kioxia, the No. 2 player in the NAND flash market with a 19 percent stake. If Micron succeeds in acquiring Kioxia, it will be on a par with Samsung Electronics in the NAND flash market.

Not only Micron but Taiwan's Nanya are narrowing its technology gap with Samsung Electronics by speeding up the development of EUV DRAMs. China did not give up localizing memories either.

SK Hynix is in a relatively better situation. SK Hynix took over the NAND flash business from Intel for 10.3 trillion won in October 2020, making itself the second largest NAND flash maker. In 2021, it will focus on stabilizing mass-production of EUV DRAMs and 7th-generation 3D NAND flashes, which had already been developed, at the M16 line in Icheon, Gyeonggi Province.

Samsung Electronics is also slow in developing AI semiconductors, which are attracting the spotlight as a new business item for the future. Infineon, a German semiconductor company, started to release semiconductor solutions made of SiC and GaN materials in 2018.

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