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| A smartphone with the Huawei and 5G network logo is seen on a PC motherboard in this illustration picture taken Jan. 29, 2020. Reuters-Yonhap |
By Kim Yoo-chul
Despite the memory semiconductor industry being less affected by the COVID-19 pandemic than other sectors, there has still been a negative impact on consumer items that is casting doubt on its near-term outlook.
But market leader Samsung Electronics is using this challenge as an opportunity to widen its lead over rivals, as the company is betting heavily on a big recovery.
Samsung plans to expand its monthly wafer capacity for DRAMs, flash memory and foundry chips by 30,000, 60,000 and 20,000, respectively, next year.
"The rationale is that there will be a significant undersupply of DRAMs and NANDs throughout next year, thus leading to a price and profit recovery. Samsung Electronics is showing very attractive risks and rewards," a U.S.-based portfolio asset manager, who invests millions of dollars in Samsung, said Monday.
The manager said Samsung Electronics was in discussions with its parts suppliers as it has to address any outstanding issues before placing orders with them. "Samsung will remain very aggressive in widening the tech gap with the rest of the industry as it has already began mass-producing advanced 3D NAND chips, about a year ahead of its rivals."
Samsung's plants in Pyeongtaek, Gyeonggi Province, are set to take a central role in handling the increased capacity. In a recent conference call announcing its third-quarter performance, Samsung said it was expecting to see a "meaningful turnaround" as inventory levels of memory chips were being rationalized with the firm receiving more orders for profitable server chips.
"Samsung will be aggressive in producing NAND flash memory chips, while it will maintain a conservative stance with DRAMs. I can say given the estimated shortage of foundry (contract-based) chips, Samsung will invest at least 10 trillion won next year into its Pyeongtaek and Austin, Texas, plants," said Do Hyun-woo, an analyst at NH Investment.
Samsung's higher appetite for the NAND flash memory chip business is because it is becoming increasingly questionable whether current DRAM technology will be able to maintain the storage capacity in decreasing cell areas below 1-nanometer products.
While NAND chips will soon face scalability challenges at the much thinner level between 10 nanometers and 20 nanometers, Samsung believes NAND chips are well-positioned for further density and cost improvements as the company is on track to advance its manufacturing technologies through extreme ultraviolet (EUV) lithography.
"It was thought that Samsung would not heavily add wafer capacity in memory chips so as not to repeat the mistakes of 2018, indicative of a more rational supply behavior in today's upcycle. But it seems Samsung is aiming to adjust its strategy so as to gain a bigger share in the sector amid the digital transition and expected tight supply," the U.S. portfolio manager said.
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