Samsung Electronics has virtually shelved its second phase investment in its semiconductor plant in Xi’an, China. It seems that the Korean electronics giant is concerned about a sharp rise in supply due to the expansion of NAND flash plants by Toshiba, SanDisk and Intel with the memory semiconductor market forecast to have the worst market situation in seven years this year.

According to the semiconductor industry on Feb. 3, Samsung Electronics postponed the second phase investment in the Xian plant to some time in 2016 or beyond. Samsung Electronics currently uses about one fifth of the whole area (about 1.1 million square meters) of the Xi’an plant, which has already reached its maximum production capacity with its current equipment. This situation compelled industrial experts to predict that the company will execute its second phase investment in the remaining site within this year.

The Xi’an plant, which began to operate in 2014, is the core production base for “V NAND,” the 3D NAND flash of Samsung Electronics. According to some industrial sources, the plant is processing up to 100,000 wafers a month although less than two years have passed since the start of its operation. The production volume is well over the 60,000 to 70,000 units that were originally forecast.

It is said that Toshiba and SanDisk’s massive expansion of NAND flash production lines burdened Samsung Electronics in enforcing the second phase of investment. Toshiba will build a 3D NAND production base by investing 500 billion yen in concert with SanDisk and put the base into operation in 2017. At the same time, Intel and Micron will begin to mass-produce 3D NAND flash. There is a concern that if Samsung begins to invest in the second phase of investment, too, the NAND flash market will get mired in extreme supply competition. This concern made Samsung Electronics think again.

“Toshiba’s expansion into the market is the biggest burden to Samsung, as Toshiba and Samsung share the NAND flash market and Toshiba has the most stable mass-production structure,” a semiconductor industry expert said. “Although Samsung does not take Intel’s and Micron’s NAND flash plants too seriously, the company is concerned about the possibility that the two will take China’s demand for next-generation data centers.”

By: DocMemory
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