By Kim Yoo-chul
Samsung Electronics and SK hynix have signed an agreement to share patents for chipmaking technologies for five years.
"The agreement is significant as the deal will help Samsung focus on developing advanced chip technologies," Samsung said.
The two firms will have full access to each other's patents. Samsung and SK hynix have 102,995 and 21,422 chipmaking patents, respectively.
The SK Group affiliate said the deal will help the world's second-biggest chipmaker avoid "unnecessary patent disputes" with Samsung.
The agreement includes a license to all semiconductors for payments of certain amounts for the next five years, said a source familiar with the issue, asking not to be named.
Samsung plans to improve its strength in profitable chips such as mobile DRAMs as it is cutting reliance on conventional memory chips.
"Samsung is now more focused on profitability in the chip business and this agreement will lead to a better environment in memory chips and help us to speed up our development of our lucrative non-memory chips," said a researcher at one of Samsung's chip facilities.
On the other hand, SK hynix seeks to learn and acquire Samsung's know-how in mobile DRAMs and NAND flash chips. SK hynix is trying hard to ship more logic chips to leading smartphone makers in China such as Huawei.
"The conventional memory chip industry is undergoing unprecedented structural changes. Consolidation and increasing barriers to entry, combined with escalating technological uncertainty and reduced demand elasticity pave the way to a new memory paradigm that no longer rewards aggressive investment," said Mark C. Newman, a senior analyst at Sanford C. Bernstein in Hong Kong.
"Samsung's strategic motivation has fundamentally changed. As industry matures, chip manufacturers need to consider returns more than growth. Falling chip prices only benefit Samsung's handset and tablet rivals," said Newman in a note to its premium clients.