Korean chipmakers plagued by trade pressure

By Kang Seung-woo

Korean chipmakers, enjoying a semiconductor “super-cycle,” are bothered by trade pressure as overseas companies’ attempts to keep them in check are intensifying.

The latest move to inhibit Korean players -- Samsung Electronics and SK hynix -- from controlling the lion’s share of the global semiconductor market came earlier this week from U.S. memory chipmaker BiTMICRO

According to the U.S. International Trade Commission (ITC), the California-based firm filed a complaint against Samsung, SK and a handful of global companies alleging they violated patents related to solid state drive (SSD) technology.

“The complaint states that the proposed respondents import and sell products that infringe the asserted patents. The complaint specifically refers to various computers, mobile phones, tablets, watches and components thereof, as infringing products,” said the ITC, a quasi-independent federal body that rules on trade violations.

The ITC will normally determine whether to institute an investigation within 30 calendar days after the filing of a complaint.

SSDs are new generation storage devices that are emerging as a replacement for hard disk drives (HDD) as the former provides a quicker and more stable performance.

An SSD is manufactured based on NAND flash memory used for mobile devices and Samsung and SK are the world’s largest and fourth-largest largest NAND flash memory manufacturers, respectively.

Some market watchers believe that the complaint is the latest attempt to keep Korean semiconductor companies under control amid still strong demand for the product that helped Samsung and SK post all-time high operating profits last year. Samsung chalked up an operating profit of 24.3 trillion won ($22.8 billion) from January to September last year, while SK earned 9.25 trillion won.

“The series of allegations over patent infringement against Korean chipmakers recently can be understood as being based on ill intention toward Samsung and SK because the companies have established themselves as global leaders in the sector,” an industry source said.

Last year, U.S. server memory maker Netlist filed a complaint alleging SK hynix had infringed on its patents -- although Netlist brought its first ITC complaint against SK hynix in September 2016, only to be dismissed at an initial determination in November that year.

In September, U.S. semiconductor packaging firm Tessera also filed infringement suits against Samsung, alleging that the Korean company violated its patents covering semiconductor processing, bonding and packaging.

In late 2017, the Chinese government was reported to have looked into the possibility of NAND price fixing amid a price surge, seen as Beijing pressuring Samsung to slash chip prices among market watchers -- although the company denied the report.

According to industry tracker IHS Markit, demand for DRAMs in 2018 could hit $84.4 billion, a gain of 16.9 percent from last year, while sales of NAND flash memory chips are expected to grow 10 percent year-on-year to $59.2 billion.

DRAMs are a significant part for desktop computers while NANDs are the building blocks for mobile devices such as smartphones.