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Chip business has become a secret weapon Samsung profits growth, Intel's first chip maker status does not guarantee
Nov 25, 2017

Market research firm IC Insights recently said that Samsung Electronics is likely to surpass Intel as the world's No. 1 semiconductor maker this year with a 15% market share and $ 65.6 billion in revenue. Last year, Samsung's semiconductor business revenue was 44.3 billion US dollars.

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Samsung will become the largest ultra-Intel chip maker

This year, Samsung made a total investment of 26 billion U.S. dollars in semiconductor manufacturing facilities, accounting for 29% of the total investment in the world, and this investment continues to increase. IC Insights expects Samsung's chip revenue this year is expected to reach 65.6 billion US dollars, accounting for about 15% of the global chip market share. At the same time, Intel's annual revenue is expected to be 61 billion US dollars, accounting for about 13.9% of the global chip market share.

Samsung Electronics is currently the world's largest manufacturer of DRMA memory chips and NAND flash memory chips. The rise of Samsung Electronics is closely related to the sharp rise in the average sales price of DRMA memory chips and NAND flash memory chips this year. Why DRAM and NAND flash memory chip prices will rise sharply from 2016 it?

Samsung is the first 3D NAND maker in the industry to begin layout in 2012. However, because of the very low chip yield, it has been losing money and trading for a long time, until last year it basically achieved breakeven. The other three of the four largest storage chip companies in the world (Samsung, Toshiba + SanDisk, Micron + Intel and Hynix) basically started to intervene in 3D NAND last year. This naturally leads to low yield and insufficient capacity. We all see 3D NAND is the trend, so are increasing investment in this area. The traditional 2D NAND investment expansion basically at a standstill, but the storage market demand is on the rise.

In this regard, the United States authoritative computer magazine PCMag believes that this can be attributed to Chinese consumers. More and more Chinese consumers are beginning to buy high-end devices that require memory chips. At present, Chinese manufacturers still can not produce these high-end chips, resulting in price increases. And Samsung's chips sell more and sell more expensive.

In addition to the growing market demand for DRMA memory chips and NAND flash memory chips, Samsung Electronics will be able to crowd out Intel as the world's largest chip maker and benefit from the company's continued huge investment in the chip business in recent years.

Samsung's counter-road

Currently, the top 10 global chip companies are Intel, Samsung, Qualcomm, Broadcom (acquired by Anwar Co., Singapore in 2015), SK Hynix, Micron Technology, Texas Instruments, Toshiba, NXP, . Prior to this, since 1993, Intel surrendered to the world's first master, the chip hegemony has maintained nearly a quarter of a century. Samsung also began to dominate the field of chips Intel's gap between the smaller and smaller, but failed to surpass the latter. Samsung in the global top 10 chip companies all the way up the list, ranked No. 7 in 1993, No. 4 in 2000, No. 2 in 2006, in 2016, the direct gap with Intel has been very small.

In the global memory market, Samsung Electronics accounted for 47.5% share, while in flash memory market accounted for 37.1%. In addition to direct production of chip sales, the Samsung Semiconductor Division also has a huge OEM business, which each year to the Apple Foundry A series processors. In contrast, Intel mainly produces chips, foundry business a small proportion.

It is precisely because of the outstanding performance of the chip, so the industry believes that Samsung will become the biggest beneficiaries of memory chip prices so far in 2016 and promote its recall of galaxy note7 in the fourth quarter of last year caused a loss of up to 5 billion US dollars, Instead, net profit skyrocketed. Technology market analyst Peter Lee said that in the next period of time, the memory chip prices will continue to rise, especially for enterprise server memory, because Google, Amazon, Facebook and other technology giants are greatly increased server procurement, which supports the memory market.

In contrast, Intel missed the era of the smart phone, Intel also recognized its own challenges, unable to compete with Qualcomm, MediaTek market, Intel has stopped the follow-up upgrade of the mobile phone processor, take the initiative to withdraw from the competition. Intel entered the NAND flash memory market in 2005 through a joint venture with Micron, but Intel is currently in sixth place in the market.

Intel's main business is the personal PC processor, due to AMD and ARM architecture processor competition, the continued decline of the personal computer market, making Intel dominate the personal computer processor market performance has also been dragged down. And Intel's chief ally, Microsoft, has also announced that it plans to release Surface CloudBooks with ARM-based processors that will support the full version of Windows, a major blow for Intel. This also shows the impact of mobile internet on global technology companies from one aspect. As a result, in recent years, Intel has focused on data center operations and expects to offset the decline in its PC processor with sales of server-only processors.

For Intel, their focus is now no longer on the PC processor, after all, this is a sunset field, profits and benefits have been limited. In recent years, Intel has actively deployed as a lot of emerging businesses. In March this year, Intel acquired Mobileye, an Israel-based technology company, for a total investment of 15.3 billion U.S. dollars. It hopes that through the chips in areas such as automotive autopilot, artificial intelligence and internet of things Make up for the shrinking of the computer chip, but because these businesses have just started, I am afraid this time still difficult to help them deal with the challenges of Samsung and other companies now!

Zero mirror point of view:

As we all know, a large part of Samsung's revenue comes from memory chips, accounting for about 42% of its revenue. In the recent two years, with the rapid popularization of smart mobile devices and increasing memory, the price of memory chips has been rising all the time, thus achieving Samsung's catching up and surpassing to Intel. In the future, if the price of memory does not drastically plunge, Samsung is expected to surpass Intel throughout the year to become the industry leader. However, given the new M & A deals involving Qualcomm, NXP, Broadcom and other companies, the integration of the global chip industry is also intensifying. The global semiconductor industry is likely to enter a mature phase, during which time companies will likely rank significantly.

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