As a new order prevails across the global semiconductor industry, the market is expected to become more balanced next year because the sector's leaders have no plans to lift their investments in chips in 2015.

After exits and bankruptcies, the key word for Samsung and SK hynix, the world's top two memory chip manufacturers, is how to maximize profit rather than expand capacity, said officials and market analysts on Sunday.

"We can confirm that our memory chip business is mainly about extending periods in order to achieve market balance and stabilize the chip price," said an official at Samsung's semiconductor division.

"We have no reason to destroy the market by expanding output."

He said that the outlook for the fourth quarter remained strong because the company was on track to boost demand for its memory solutions for mobile DRAMs and for NAND flashes used in all digital devices.

"The growth rate could be slower than this year," he said. "Our main goal is to be more rational on the supply side and to keep the market balanced."

In line with that strategy, the company's semiconductor unit is expected to generate more profit and revenue.

Bernstein Research supports the strategy.

"As the largest DRAM player, going for volume share would only hurt Samsung the most," it said.

Samsung has budgeted to spend 24 trillion won on its facilities this year.

However, only about 60 percent has so far been spent in the first nine months. This means more investment is on the way in the fourth quarter for displays, chips at its Line 17 facility in Korea and transition for 14-nm techs.

According to the research firm, "Samsung does not anticipate a big change in the overall level of investment next year".

Samsung said earlier it would respond to the growing demand for mobile DRAMs used in smartphones and flash-type memory chips for solid state drives for corporate servers. But it said those plans were mostly aimed at improving profitability.

SK hynix follows similar moves

SK hynix, second only to Samsung in the industry, is set to follow the Samsung strategy because it also believes that adding capacity would go against market trends.

The SK Group's semiconductor affiliate declined to comment. But company sources said its investment plan would not be much different to this year.

"SK hynix may invest about 5 trillion won in facilities and this is a small increase from this year," an official said. "We need to develop our chip technologies and to put equipment into our new M14 line in the local provincial city of Icheon."

President Kim Joon-ho recently said the company had invested 3.9 trillion won during Jan.-Sept., and that total investment would be about 4 trillion won.

While SK hynix is positioned well for high stakes in DRAM chips because SK is heavily relied on pure memory chips unlike Samsung, which is pushing to grow logic chips ¯ the component to power complete computing devices, the company is expected to join with new business partners for possible arrangement of NAND controllers in order to help the NAND business contribute more to the corporation's profits.

By: DocMemory
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