Smart things (public account: zhidxcom)
Compile | High song Edit | Jiang Xinbai Wisdom news on May 24, yesterday, Nikkei Asia reported that US storage manufacturer Micron is challenging Samsung Electronics’ position in the semiconductor storage industry. The latest quarterly financial reports of Micron and Samsung Electronics show that in the first quarter of 2021, Samsung’s semiconductor business operating profit margin was 18%, while Micron reached 20%. And in the past five years, Samsung Electronics’ market share in DRAM and NAND flash memory products has declined, while Micron has increased by 3% and 1%, respectively. The Nikkei Asian Review stated that the reason why Samsung Electronics’ semiconductor business profit margin has declined is that, in addition to weather such as snowstorms in Texas, it is also possible that Micron’s rapid progress in the memory chip manufacturing process has made Samsung Electronics’ semiconductor storage division more competitive. decline. Because the memory chip business is the main source of profit for Samsung Electronics, it is also an important income component of the semiconductor business. The decline in Samsung Electronics’ profitability in this area may also affect the company’s other businesses such as foundry, display devices and smart phones. 
▲The quarterly operating margin changes of Samsung Electronics, SK Hynix and Micron (Source: Nikkei Asia) 1. Micron hires Japanese and Korean engineers, technical strength may be comparable to Samsung It is reported that the Texas blizzard in the United States has caused losses to some semiconductor companies. In mid-February, a blizzard occurred in Texas, the United States, causing a large-scale power outage. This also caused the local chip factories of Samsung Electronics, NXP, and Infineon to shut down for a period of time, while Micron, which had no factories in Texas, escaped the disaster. In addition, Nikkei Asia believes that the reason for the decline in the profit margin of Samsung’s storage business is inseparable from the decline in the competitiveness of its products. At present, Samsung Electronics’ semiconductor storage business revenue is about 49 billion U.S. dollars (about 315.2 billion yuan), accounting for about 40% of the global market, and still ranking first in the world. In terms of technology, Jin-man, vice president of Samsung Electronics, said in a conference call on April 29 that Samsung Electronics has the highest proportion of 15nm DRAM and will continue to take the lead in 14nm DRAM in the second half of the year. But on the other hand, Micron has begun mass production of DRAM particles based on the 1α process, and is the first company in the world to mass produce the fourth-generation 10nm DRAM; in terms of NAND flash memory, Micron has also taken the lead in launching 176-layer NAND flash products. , And walked in front of Samsung Electronics. During Micron’s 2021 second fiscal quarter (December 2020-February 2021) earnings conference call, its CEO Sanjay Mehrotra mentioned that Micron’s cutting-edge products will be mass-produced as planned and will become Micron’s 2022 leading product. Insiders believe that Micron’s rapid technological development is due to the support of many overseas engineers. It is reported that Micron is hiring a large number of Japanese and Korean engineers from storage vendors such as Kioxia (formerly Toshiba Semiconductor), SK Hynix and Samsung Electronics, and is developing storage chip manufacturing processes in factories in the United States and Japan. In addition, Micron also acquired Japanese storage manufacturer Elpida in 2013. Elpida has many excellent DRAM engineers. After using these engineers to complete the process research and development, Micron has already possessed the technical capabilities that rival Samsung Electronics. 2. Micron is eating away at Samsung’s storage market share According to data from the British consulting company Omdia, Samsung Electronics’ DRAM market share is as high as 41.7% in 2020, ranking first in the market. SK Hynix and Micron occupy the second and third positions with 29.4% and 23.5% market shares respectively. But in the first quarter of this year, SK Hynix’s operating profit margin was only 16%, ranking last among the three companies. Samsung Electronics, Micron and SK Hynix together accounted for 94.6% of the DRAM market. This makes the market highly concentrated and allows the three companies to obtain high profits. In 2018, the hot DRAM market allowed Samsung Electronics, Micron and SK Hynix to achieve operating profit margins of more than 50%. Behind the high profit margin is the investment adjustment strategy adopted by Samsung Electronics. For example, when DRAM prices in the market begin to fall, Samsung Electronics will adjust the amount of investment to maintain a balance between supply and demand. Because Samsung Electronics monopolizes cutting-edge DRAM products and has an overwhelming market share, this strategy has effectively maintained the stability of the DRAM market. ▲ DRAM market share in 2020 (Source: Nikkei Asia) Nikkei Asia said that if Micron’s technological improvements threaten Samsung’s market position, it may intensify the competition between the two or cause turbulence in the DRAM market. In fact, Micron has begun to eat away at Samsung Electronics’ DRAM market share. In 2016, Samsung Electronics’ DRAM market share was 46.6%, and fell to 41.7% in 2020. In addition, Samsung Electronics’ market share of NAND flash memory products has also fallen from 36.1% to about 34% in 5 years. From 2016 to 2020, the market share of Micron’s DRAM and NAND flash memory products increased by 3% and 1%, respectively, to 23.5% and 11.2%. For Samsung Electronics, the semiconductor storage business has always been its main source of profit, and it often provides financial support for other businesses. At present, in order to compete with TSMC in the foundry field, Samsung Electronics is continuously increasing its investment in the foundry business; and its R&D investment in display screens and smartphones is also increasing. If Samsung Electronics’ profitability in the storage field declines, it may affect the company’s other businesses. Conclusion: Samsung’s profitability is still above the average level, and the competitive situation may continue Although Samsung’s operating profit margin was 18% in the first quarter of this year, which is a decline from previous periods, in the manufacturing sector, this ratio is still above the average level. In addition, Samsung Electronics has a larger business scope than Micron, and has a certain degree of anti-risk capabilities. It is difficult for the competition between the two to distinguish the winner or loser in the short term. In the current global shortage of cores, the importance of Samsung’s foundry business is also increasing, and the storage business may be fed back in the future. In the future, Samsung Electronics, SK Hynix, and Micron will continue to have a triumphant position in the DRAM market for some time. What can determine the final outcome will also be the landing experience and actual performance of various products. Source: Nikkei Asia
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