Micron challenges rivals in memory chip market

Samsung Electronics' chip plant in Pyeongtaek, Gyeonggi Province / Courtesy of Samsung Electronics

By Kim Bo-eun

Three major players continue to maintain an oligopoly over the global memory chip market, but Micron Technology's latest claims are challenging Samsung Electronics and SK hynix which have reigned supreme so far.

Sanjay Mehrotra, CEO of the U.S. chip manufacturer, said recently his company would be volume shipping new products based on its leading 176-layer NAND and 1-alpha DRAM technology this month, at the Computex 2021 event held in Taipei on June 2.

Earlier, Micron said it would make volume shipments of 1-alpha node DRAM products using the industry's most advanced DRAM process technology. Micron is the first to mass-produce 1-alpha node DRAM products.

Micron's 1-alpha node DRAM is equivalent to Samsung's DRAM with a circuit line width of 14 nanometers. Samsung is currently mass-producing 15-nanometer DRAM, and a senior executive told investors in a first-quarter earnings conference call in April that the company would begin volume shipments of 14-nanometer DRAM chips in the second half of this year.

The prospect of losing the lead in new developments seems to be unnerving officials at Samsung, the top player in the memory and NAND markets.

Samsung Vice President Han Jin-man's reference in the conference call to the specific size of its DRAM memory was seen as intentional, given than Samsung had refrained up until then from making official comments on details of its products since 2016, when competition over smaller DRAM memory chips came down to the 10-nanometer level. The executive appeared to be stressing Samsung's competitiveness at a time when Micron is making strides.

Such remarks came as the Idaho-based company also edged past Samsung's operating profit margin for its chip business. In the first quarter of this year, Samsung's operating profit margin reached 17.7 percent, while Micron's stood at 20 percent. Part of Micron's growing competitiveness is believed to stem from the scouting of engineers from Samsung and SK hynix as well as Japanese players including Kioxia, according to sources.

Samsung accounted for 41.7 percent of the $66.3 billion global DRAM market in 2020, followed by SK hynix with 29.4 percent and Micron 23.5 percent, according to market tracker Omdia. Samsung's market share is down 5 percentage points from 2016, when it accounted for 46.6 percent. Micron's share of the market rose by 3 percentage points over the same period.

SK hynix's plant in Icheon, Gyeonggi Province / Courtesy of SK hynix

The memory business has largely driven Samsung's operating profit, and the sector leader is now seeking to invest more in non-memory chips and the foundry sector.

Samsung plans to invest 171 trillion won into its memory and system semiconductor businesses. The revision, reflecting additional investments, comes after Samsung said in 2019 that it would invest 133 trillion won by 2030 to become the world's top semiconductor company.

On the sidelines of President Moon Jae-in's May 21 summit with U.S. President Joe Biden, Samsung said it would invest $17 billion into a semiconductor fabrication plant to be built in the U.S. But it didn't specify which U.S. states it is eyeing.

In the foundry sector, Taiwan's TSMC looms over Samsung. TSMC has pledged to spend 113 trillion won to set up plants over the next three years. It is building large-scale facilities in the U.S. and reports said it will choose Japan as another strategic location for production.

Samsung is facing pressure in all sectors, but the tech giant is expected to take strategic steps once its chief Lee Jae-yong is released from prison. Lee is currently serving a sentence for his involvement in a bribery scandal involving impeached former President Park Geun-hye.

Expectations are growing that Lee may be paroled on the occasion of Liberation Day on Aug. 15, as calls grow for the tycoon's release in consideration of the role Samsung could play in raising Korea's competitiveness in the chip industry.

Market watchers say Samsung may be able to unveil a response to Micron's latest developments once Lee regains his leadership.