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SK hynix rises as the global No. 3 chip maker
By Kim Yoo-chul
Samsung Electronics has managed to significantly narrow its gap with Intel thanks to convincing growth in memory and logic chips, according to a leading market research firm Sunday.
U.S.-based IHS said the firm's global share as of the second quarter of this year was 12 percent in terms of sales in both chip sets, which reached $10.3 billion.
Among the Top 20 in the market, Samsung was the fastest growing company at more than 10 percent, while Qualcomm was the worst performer with a 13 percent decline.
Its share gap with long-time global leader Intel has been narrowed by 1.6 percentage points; the closest since Samsung advanced into the semiconductor industry more than two decades ago, said company officials.
Intel's share in the second quarter was 13.6 percent worth $11.7 billion. Over the past few years, the gap between the two semiconductor majors has narrowed from 6.9 percentage points in 2011, 6 percentage points in 2012 and 3.4 percentage points in 2014.
Market analysts say Samsung may become the world's biggest semiconductor supplier this year by beating Intel as the company's logic-chip division, which was relatively weaker than its conventionally strong memory chips, is seeing a steep rise thanks to orders from major technology firms to manufacture chips on a contractual basis.
Samsung produces chips for Nvidia, Sony and Qualcomm with its own design to guarantee better production yields and stability.
Also, its latest partnership with GlobalFoundries of the United States has significantly lessened worries over "geopolitical risks," helping it get more orders for logic chips, which are much more profitable than memory chips.
The foundry model refers to the separation of a chip-plant operation from an integrated-circuit design operation. Samsung was weak in logic chips which are needed for advanced technology devices.
It is currently focusing on applying 14-nanometer processing technology to fabricate mobile processor chips for its biggest client, Apple, meaning that Samsung chips will control an entire computing system inside iPhones.
A turnaround in smartphone demand is also cited as another factor helping Samsung get closer to Intel.
"In short, we see an inventory correction in smartphones delaying second quarter chip price stabilization, but as this is resolved, next year will move back to an undersupply for both DRAM and NAND. For memory stocks, we think short-term prolonged weakness is already anticipated but recovery in 2016 is not at all understood and hence provides an opportunity," said Bernstein Research's Mark C. Newman, in a recent note to clients.
"For NAND flash-type chips, we have an industry undersupply next year as smartphones improve and solid state-drive (SSD) demand continues to ramp up. Even if there is no increase in smartphones, the situation will be balanced and improved on versus this year," Newman said.
The IHS data also showed that SK hynix is the world's No. 3 semiconductor maker by outselling Qualcomm with a global share of 4.9 percent mostly because of huge growth in its memory chip business.
"SK hynix remains our best pick amongst pure play memory makers. SK hynix is already pricing an 81 percent PC DRAM price correction and is the best bargain amongst all memory names in our coverage," Bernstein said.
