When Chinese leader Xi Jinping, US President Joe Biden and Ursula von der Leyen, the President of the European Commission, each made plans to spend billions to reduce dependence on foreign-made computer chips, the global supply chain seemed to to be reformed.
But analysts and Samsung, the world’s largest memory chip maker, don’t expect the South Korean group to be ousted any time soon.
“I think we can maintain, if not increase, our market share for the foreseeable future,” a senior Samsung executive told the The Washington City Times at a factory south of Seoul.
The US, China and Europe are vying to boost investment in the sector after a pandemic-related automotive chip shortage has heightened fears of relying on foreign manufacturers of critical technologies.
Biden has proposed a $ 50 billion chip manufacturing and research plan, and Xi has committed to spend more than $ 1 billion on high-tech industries, with a particular focus on semiconductors.
But analysts said it is unlikely that Samsung’s leadership will be challenged any time soon.
“If a new foundry comes online by 2025, you’ll be practically groundbreaking by the end of this year,” said Velu Sinha, a partner at Bain & Company. “So the chances of something happening now that will change in the next two or three years and change the mix is pretty unlikely.”
Samsung has dominated the production of Dram and Nand chips for decades. The former allows short-term storage for graphics, mobile and server chips, while the latter allows files and data to be stored without power.
But the company’s warning to challengers wasn’t just based on past performance. Samsung also believes its position is secure, both due to advances in manufacturing technologies and expensive chip manufacturing.
“The pace of that migration is currently accelerating. In fact, it is extremely difficult for incumbent operators such as Samsung to continue to do research and investment, ”said the director. “It won’t get any easier for other suppliers.”
Since 1974 – when Samsung founder Lee Byung-chul and his son Lee Kun-hee averted the skepticism of their management teams and funded the company’s first investment in semiconductors – legions of engineers have focused on a special task: figuring out how to save more data on smaller chips. The company is squeezing 16 billion cells onto its miniature Dram chips, a huge improvement from 64 million bits in the 1990s.
The complexity and scale involved in manufacturing advanced chips pose a serious challenge to any company or government trying to take Samsung’s lead.
In the bowels of an inconspicuous tower building on the company’s campus in Hwaseong, south of Seoul, a mechanical arm suspended from the ceiling picks up a plastic container containing a stack of wafers – thin slices of silicon extracted from sand – and whistles it. his next destination. For approximately three months, the wafers will go through a series of automated steps, including etching, cleaning, and circuit drawing. Some of these processes will be repeated hundreds of times.
Samsung accounted for 15 percent of the total worldwide production capacity of these wafers at the end of 2020. This put the company ahead of Taiwan Semiconductor Manufacturing Company, the world’s largest producer of processor chips, and memory chip rivals Micron and SK Hynix.
Samsung has also cited its intellectual property leadership and technical experience as evidence that it could defend its position.
Chief among these is the use of extreme ultraviolet lithography in the production of Dram chips. EUV is a step change from deep ultraviolet lithography, which means that increasingly finer circuits can be drawn onto the chips. The result is much more power and energy efficiency.
Samsung, TSMC and Intel use EUV technology to create advanced advanced processor chips. But the South Korean company said it was ahead of its competitors in rolling out the technology in Dram chips, using its joint research and development center for both processor chips and memory.
Spending by Asia’s largest chip makers has also fallen below promised by Washington, Brussels and even Beijing.
IC Insights, the market research group, said Samsung has spent $ 93.2 billion over the past three years on its semiconductor business, double that of all semiconductor suppliers in China combined.
‘Can governments such as the EU, the US and China. . . overtaking in the [semiconductor] technology race with Samsung and TSMC? Considering how far behind they are. . . governments should spend a minimum of $ 30 billion a year for a minimum of five years to have a reasonable chance of success, ”said IC Insights.
Samsung increased capital expenditures for its processor chip business through 2030 by Won38tn to Won171tn ($ 151.4 billion) on Thursday. It also announced a new plant in Pyeongtaek that produces high-quality Dram and processor chips using EUV technology. Moon Jae-in, South Korea’s president, also confirmed extensive tax breaks for chip research and manufacturing facilities, in an effort to counter measures from Beijing and Washington.
Nonetheless, Chinese challengers are slowly making gains.
Dan Wang, a Shanghai-based tech analyst at Gavekal Dragonomics, pointed to Yangtze Memory Technologies and Changxin Memory Technologies, which have cornered about 3 percent of their respective Nand and Dram markets.
“Both companies have hired a large number of Korean engineers, who make up the bulk of the global memory chip talent. Most in the industry today expect YMTC to become a major global player within three to five years, ”Wang wrote in a note.
Bain’s Sinha said China’s chip industry is slowly showing signs of moving away from technologies of “Western origin.” But he cautioned that he did not expect established players in the global industry to change in the next three to five years.
“Alternatives are emerging that allow the ecosystem in China to continue to develop richly.”
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