Samsung Electronics, the world’s leading memory chip producer, plans to invest 13.5 trillion won ($12 billion) in semiconductor facilities next year, up from the 13 trillion won spent this year. “Samsung doesn’t expect a drastic change in the overall level of spending on chip facilities,” said a source Monday. He said the small increase in chips is because its strategy is all about maintaining market equilibrium and price stabilization.
The global memory chip industry is being controlled by “top-three” players including Samsung, SK hynix and Micron Technologies of the United States. They produce more than 93 percent of global chips, according to research firms. Samsung invested 12.6 trillion on chip plants in 2013, 13.85 trillion won in 2012 and 13.03 trillion won in 2011. Samsung plans to build a new NAND flash type memory chip line in Xian, China, where Samsung already operates its massive facilities.
The semiconductor business is now Korea’s top export earner. Through November, the nation’s major semiconductor makers including Samsung and SK pulled in about $56.8 billion in revenues, the largest ever and about 10.9 percent of the nation’s total exports for the period. There are more than two weeks remaining in 2014, but since oil products are the second-largest export item with total sales of $48.1 billion through November, semiconductors will be the nation’s No.1 export business for the second consecutive year. Industry insiders say total exports for the business will exceed $60 billion by the end of the year.
The semiconductor business, which began in the early 1980s, earned Korea foreign exchanges that were used as seed money to develop advanced electronics industries, including smartphones and wireless communication devices. It was the No. 1 export business for 16 years, from 1992 to 2007, but started fluctuating in 2008 due to the global finance crisis. In 2008, Korea only pulled in $32.8 billion, just 7.8 percent of the nation’s total exports, and chips ranked sixth in export earnings. Shipbuilding was the best export that year ($43.1 billion), followed by oil products, machinery, wireless communication devices, cars and semiconductors.
SK hynix, the world’s second-biggest memory chipmaker, said Wednesday it has successfully developed an advanced 6-gigabit capacity chip with Low Power DDR3. “By applying a finer 20-nanometer processing technology, we developed the high-end memory chip to be used in value-added mobile devices. The chip consumes less power and has an expanded data storage capacity,” the firm said in a press release.
SK hynix, the semiconductor affiliate of the SK Group, has begun providing chip samples to its clients. The chipmaker supplies flash memory chips to Apple and mobile chips to major Chinese smartphone manufacturers. According to the firm, the speed of the chip is 1,866 Mbps. It can handle a maximum of 7.4-gigabyte per second in a single channel. In a dual channel, the chip is enabled to handle 14.8-gigabyte data.
In a deal that caught industry watchers by surprise, Samsung Electronics, the world’s largest memory chip maker, will purchase DRAM chips from rival SK Hynix, the world’s No. 2 memory chip maker.
According to sources Tuesday, Samsung Electronics Wireless Division sent its plan to SK Hynix last March and SK Hynix agreed to the plan after months of consideration. The DRAM chips will be used mostly for Samsung’s Galaxy S4 Mini to be launched in the second half of this year.
In a response, SK Hynix requested a purchase guarantee of 300 million mobile DRAM chips a year in terms of 1Gb and Samsung accepted the offer, sources said. The two are now discussing delivery time and prices. It is a rare deal that Samsung Electronics, which controls half of the global DRAM market, requested the supply from Hynix which represents 23 percent the market.
Samsung Electronics Co. and SK hynix Co. — the world’s two largest computer memory chipmakers — said Wednesday that they have reached an agreement to share patents for chipmaking technologies, wrapping up three-year long negotiations. Details about the agreement, including the contract’s duration and royalty fees, were not revealed, but both of the companies reportedly agreed on a comprehensive cross-licensing deal.
Samsung has 102,995 chipmaking patents, with the comparable figure for SK hynix being 21,422. Samsung also signed a similar deal with Micron Technology Inc. of the U.S. in 2010, while SK hynix forged a cross-licensing deal with Toshiba Corp. of Japan in 2007.
SK Hynix, the world’s No. 2 chipmaker, on Monday said it planned to mass produce 8-gigabit LPDDR3 mobile DRAM chips as early as the end of this year. Developed as the world’s first 8-gigabit product in its class, the LPDDR3 was created by applying 20-nanometer-class technology, and is more advanced than the 4-gigabit LPDDR3 being produced by Samsung Electronics.
SK Hynix’s newest product features high density, high speed and low power consumption, which together make for an ideal memory product, company officials said. “With the development of this high-density LPDDR3 using 20nm class, SK Hynix is now able to supply a top-performance product suitable for mobile devices to the market,” said senior vice president Richard Chin, the head of the firm’s global sales and marketing.
The government and six private companies will jointly invest in research and development (R&D) of new technologies by a third party, the commerce ministry said Thursday. An investment agreement was signed Thursday between the Ministry of Trade, Industry and Energy and six private firms, including the world’s largest memory chipmaker Samsung Electronics Co. and SK hynix.
Under the agreement, the government and the six companies will jointly invest 25 billion won (US$22.27 million) over the next five years in R&D projects by universities or other independent institutes to develop new materials or technology for memory chips. The program will be the first of its kind as previous arrangements for joint R&D investment mostly entailed government support for R&D activities by the firms themselves.
Technology giants such as Samsung Electronics and SK hynix, hit by the prolonged global economic slump, are now facing another headache because the cost of building new chip-making plants has been snowballing. It’s getting tougher for top-tier computer memory chip makers to build new advanced chip plants because a massive industry shift towards thinner and new manufacturing technology for making microchips with more functions at a low cost is calling them to make increased investments.
Engineers are working on each chip, to squeeze in more transistors, however, the pace of smaller chips is making the top-ranked chip suppliers invest more than $10 billion for a single plant, said a global securities and investment banking firm Jefferies & Co. “We expect over $10 billion to be needed to construct an advanced chip-making plant next year from $7.4 billion in 2011 and $4.4 billion in 2009,” according to a document titled “Cost of building leading edge semiconductor factory” written by Jefferies.