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[Newsmaker] Samsung poised to be world’s largest chipmaker

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Published : 2017-05-02 15:08
Updated : 2017-05-02 17:39

Samsung Electronics is predicted to become the world’s largest chipmaker in the coming quarter, displacing Intel, which has retained the top spot for the past 24 years.

Intel has been the world’s top semiconductor manufacturer since 1993, when it introduced its Pentium-branded processors, which sent sales of personal computers soaring to new heights. However, the recent trends of a continued rise in prices and demand for memory chips are driving Samsung, the world’s largest memory chipmaker, to catch up with the company. 
(Yonhap)

“If memory market prices continue to hold or increase through the second quarter and the balance of this year, Samsung could charge into the top spot and displace Intel, which has held the No. 1 ranking since 1993,” Bill McClean, president of the US research firm IC Insights, predicted Monday.

IC Insights predicted chip sales of Intel would post $14.4 billion in the second quarter, while Samsung’s chip sales would record $14.6 billion during the same period, with on-year growth of around 4.1 percent predicted. 

“If achieved, this would mark a milestone achievement not only for Samsung, specifically, but for all other competing semiconductor producers who have tried for years to supplant Intel as the world’s largest supplier,” the report said.

Samsung’s strong performance is driven by the growing prices of memory chips, DRAM and NAND flash, whose prices are expected to rise 39 percent and 25 percent respectively this year, due to the growing number of Chinese consumers seeking high-end digital devices.

The research firm also said if memory prices do not tank in the second half of this year, Samsung could beat Intel in full-year semiconductor sales results as well. Currently, both companies are headed for about $60 billion in 2017 semiconductor sales.

The Korean tech giant’s strong earnings in the first quarter were also driven by record-breaking chip sales. Its chip business’ operating profits of 6.3 trillion won ($5.5 billion) saw a 33 percent jump year-on-year, accounting for more than half of the firm’s total operating revenue of 9.9 trillion won.

Experts predicted Samsung Electronics would also post record-breaking revenues in the second quarter, based on the continued favorable market conditions of chips and the rollout of the Galaxy S8.

“The global demand for memory chips will continue for the time being. Samsung is predicted to post 13.5 trillion won in operating profit and its chip unit is expected to record 7.4 trillion won in operating revenue in the second quarter,” said Chung Chang-won, chief of Nomura Securities’ research center.

Global chipmakers are expected to increase semiconductor investment this year on growing demand for advanced technologies including the cloud, artificial intelligence, virtual reality and self-driving vehicles.

Len Jelinek, senior director of IHS Technology, said at the latest chip seminar in Seoul, “Global chip investment will increase 3.2 percent in 2017 to reach $67.7 billion.”

“Capital expenditure on semiconductors will be record-breaking worldwide on growing demand for advanced technologies,” he added.

IC Insights predicted Samsung would make the largest investment in chips this year. Samsung is predicted to spend $12.5 billion in capital expenditure, an 11 percent increase from last year. The company already spent 5 trillion won on semiconductors in the January-March period.

“(As for the demand for DRAM and NAND flash), the adoption of memory chips is growing in all applications including high-end smartphones and the expansion of data centers. Overall, there is no possibility that the demand will drastically slow down,” Samsung said during a conference call Friday.

Intel is expected to make an investment of $12 billion this year, while the world’s third-largest chipmaker TSMC is predicted to spend $10 billion.

By Shin Ji-hye (shinjh@heraldcorp.com)