Samsung's Dominance in Memory Sector Dwindling
South Korea's semiconductor industry is losing its competitiveness. TSMC is increasingly outperforming Samsung Electronics in the foundry sector and Samsung Electronics’ dominance is dwindling in the memory chip sector. Besides, most South Korean fabless firms are in the red.
The Device Solutions (DS) Division of Samsung Electronics posted 17.31 trillion won in non-memory chip sales last year, when TSMC’s sales amounted to over 50 trillion won. In 2019, the division’s sales were equivalent to 37.8 percent of TSMC’s. The figure fell to 33.8 percent last year.
The division’s operating profit was 3.37 trillion won in the first quarter of this year, down 16 percent from a year ago. This is because the division’s foundry business profitability declined. On the other hand, the operating profit of TSMC, the largest foundry in the world, amounted to US$5.36 billion in the first quarter of this year.
In the global DRAM market, Samsung Electronics’ share fell from 46.6 percent to 41.7 percent from 2016 to last year. In the NAND flash industry, Micron Technology is considering acquiring Kioxia and this may lead to a decrease in Samsung Electronics’ profit.
Although Samsung Electronics is planning to invest US$40 billion this year, the portion to go to its foundry business is likely to be rather limited with memory chip investment accounting for most. Besides, the company has yet to make specific investment decisions even with the U.S. government urging semiconductor manufacturers to invest more in the United States. Its facility expansion in Austin, Texas is being delayed while TSMC is making preparations to build six plants in Arizona.
In the meantime, half of the top 20 fabless firms listed on the South Korean stock market were in the red last year, when the global fabless sales jumped 24 percent year on year. Silicon Works, the largest fabless company in South Korea, posted 1,161.9 billion won in sales and broke the one trillion won mark for the first time last year. However, the figure is less than that of the 10th-largest in the world, that is, 1.55 trillion won of U.K.-based Dialog Semiconductor.