Samsung taking hefty gamble on NAND chips
By Jack Robertson
EBN
(09/20/02, 02:46 PM EST)
Samsung Electronics Co. Ltd. is staking its future heavily on NAND flash chips to offset an expected slowdown in the PC main memory market, a top Samsung executive told EBN this week.
The company also will up the ante in the flash market by producing the chips on 90nm technology by next year.
"It's unusual to use flash memory as one of the first products on a new process technology," said Chang-Gyu Hwang, president of the memory division at Samsung's semiconductor group, in an interview. "But we can cut costs 60% with the 90nm [node], have a higher-density, lower-power chip, and achieve higher yields."
While DRAM will still be Samsung's primary revenue source, Hwang said that wireless handsets and consumer electronics will grow at a faster rate than PCs in the next three years.
Annual PC memory growth will slow to an average of 5%, down from an historical growth rate of 15% a year, he said.
"By 2005 the non-PC market will account for 30% of all memory [semiconductors], compared to 10% today," Hwang added.
Samsung isn't backing away from PC memory and still intends to remain the world's largest supplier, Hwang said. The company will also use its new 90nm process to mass produce 1Gbit DDR SDRAM chips in the second half of next year. "We just expect higher growth rates in markets other than PC," he said.
Hwang forecasts that in 2005, NAND flash will equal 40% of all memory in wireless handsets, up from 1% this year and 6% in 2003.
Emphasizing its commitment to NAND flash, Samsung in the third quarter of 2003 will begin mass producing a 2Gbit NAND chip built on a 90nm process at its planned 300mm-wafer fab, known as Line 12.
Samsung last week said the 2Gbit device is already sampling and will be in pilot production early next year in one of the company's existing 200mm-wafer fabs. The Korean chipmaker already is volume producing a 1Gbit NAND flash.
Hwang said Samsung is "rewriting" Moore's Law, which postulates semiconductor performance doubles every 18 months. "We're doubling the density of NAND chips every year, from 512Mbits last year to 1Gbit this year, 2Gbits in 2003, and 4Gbits in 2004."
Samsung hopes its aggressive NAND push will carry it to global dominance, just as similar strategies have in DRAM and SRAM. That will take a strong effort, since Semico Research Corp., Phoenix, ranks Samsung as No. 2 in the NAND market with an estimated revenue in 2001 of $200 million, well behind Toshiba Corp.'s $500 million. Hitachi Ltd. rounds out the top three with revenue of $100 million.
Jim Handy, a Los Gatos, Calif.-based Semico analyst, believes the NAND market will grow somewhat slower than Samsung's enthusiastic forecast. He estimated NAND revenue at $742 million this year, rising to $1.16 billion in 2003, $1.97 billion in 2004, and dipping to $1.92 billion in 2005.
Meanwhile, Samsung is continuing to push process technology beyond 90nm, expecting to reach an interim 70nm development node next year and 55nm by 2004 or 2005, Hwang said.
Highlighting the technology drive, Morgan Stanley, New York, this week reported that Samsung plans to raise its semiconductor and LCD capital expenditures by 30% next year, to $4.39 billion.
Next year's capex compares with an estimated $3.38 billion for 2002, up from $2.97 billion in 2001, the report said.
Keon Han, a Morgan Stanley analyst in Seoul, Korea, said Samsung will spend an estimated
