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Samsung looking to grow in areas other than memory
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Friday, March 27, 2009
Samsung Electronics is now set to better compete with Intel by showing a clear intention to shift its chip strategy to the less volatile and profitable non-memory segment.
Although analysts and industry watchers say it seems highly unlikely Samsung will face off equally against Intel in the sector within a few years, citing a technology gap, it might launch application processors for smart phones.
With the latest batch of application processors and digital signaling processors for phones, Samsung plans to divert and expand its footprint in the non-memory sector, such as Net PCs or Net-books.
"What seems interesting is Samsung's 'three steps' ¯ marketing, chip-drawing and chip-making capabilities. By focusing more on central processing units in phones, Samsung strengthens its mobile phone leadership," Prudential Investment, a local brokerage, said, Friday.
"Net PCs, Net-books and other mobile Internet devices that use chips and operating systems are more familiar to the mobile phone business," according to a Samsung official.
Samsung is the world's second-biggest handset maker after Nokia.
It aims to sell over 200 million units this year, raising the possibility of realizing initial success in the phone-related non-memory business and has been in detailed talks with several unnamed consumer electronics companies to supply its central processors for phones.
Samsung Electronics has been buying application processors ¯ a key component in enhancing and operating mobile phones ¯ from Qualcomm and Texas Instruments (TI).
Meanwhile, South Korean memory chipmakers, including Samsung Electronics and Hynix Semiconductor, have been joining the non-memory-market fray in a bid to lessen their dependence on memory chips.
Memory chips are commonly regarded as commodities, meaning they are prone to fluctuations in their supply and demand cycle and require massive investment for shares.
U.S. chipmakers such as Intel dominate the non-memory chip sector, such as with multi-media processors, while Korean companies are the major memory chipmakers.
Since current Samsung chip business head and System LSI expert Kwon Oh-hyun took the top position in May last year, he's been calling to find the right ways to create synergy between the chip business and other applications.
In 2008, Samsung reached the 3-trillion-won sales mark in the System LSI (non-memory chip) business.
"Samsung's non-memory business ¯ its foundry and LCD driver IC chips ¯ will play a greater role in offsetting the burden of its memory business," another local brokerage, Goodmorning Shinhan Securities, said.
Samsung held some 30 percent of the global DRAM market, but its share in the non-memory sector was meager.
Some say Samsung will be positioned to better compete with chip giant Intel, as it has clarified its intention to supply advanced chips.
iSuppli, a market research firm, said Intel extended the share gap with Samsung by taking up a 13.1-percent shares in terms of chip sales, last year, followed by Samsung, with 6.5 percent.
Samsung suffered from falling profits in memory chips as the global downturn has dampened consumer appetite for electronic devices.
By: DocMemory
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