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Samsung waits for US and Chinese challenges in global chip wars

Samsung waits for US and Chinese challenges in global chip wars

Chinese leader Xi Jinping, US President Joe Biden and European Commission President Ursula von der Leyen, when they set out to spend billions to reduce their dependence on computer chips abroad, it seemed that the global supply chain would be distorted.

Analysts and Samsung, the world’s largest producer of memory chips, do not expect to replace the South Korean team soon.

“I think we can maintain our market share in the near future unless we increase it,” a senior Samsung official told the Financial Times in a factory south of Seoul.

US, China and Europe compete for pandemic-related investment car chip shortage fears of relying on foreign manufacturers of critical technologies increased.

Biden has proposed $ 50 billion plan for chip making and research and Xi is committed to spending More than $ 1 million in high-tech industries, with a special focus on semiconductors.

But analysts said Samsung’s leadership he would hardly be challenged immediately.

“If there is a new foundry that will go online in 2025, you are almost at the end of this year,” said Velu Sinha Bain & Company partner. “So it’s pretty unlikely that something will change that will change and change in the next two or three years.”

Samsung has dominated Dram and Nand chip production for decades. The former allows for short-term storage for graphics chips, mobiles, and servers, while the latter allows you to store files and data without power.

But the company’s warning to competitors was not based on past performance. Samsung also believes its position is secure, both because of advances in manufacturing technologies and because of how expensive chips are made.

“Right now the pace of that migration is accelerating. It is also very difficult for operators like Samsung to continue to do this research and investment, “the executive said.” It will not be easier for other suppliers. “

Since 1974 – Samsung By Lee-chul founder and his son Lee Kun-hee they set aside their skepticism about their management teams and financed the company’s first investment in semiconductors. Legions of engineers have focused on a single task: figuring out how to store more data on smaller chips. The company covers 16 billion cells in its small-sized Dram chips, which is a big improvement from 64m bits in the 1990s.

The complexity and scale of producing cutting-edge chips pose a serious challenge for any company or government trying to eat Samsung’s lead.

In the bowels of a tower house inside the company’s Hwaseong, south of Seoul, a mechanical arm suspended from the ceiling picks up a plastic container containing a pile of leaves – thin slices of silicon extracted from the sand – next destination. For about three months, the leaves will be moved through automated steps such as etching, cleaning, and drawing circuits. Some of these processes will be repeated hundreds of times.

By the end of 2020, Samsung would have accounted for 15% of its total production capacity. This put the company ahead of the Taiwan Semiconductor Manufacturing Company in the world the largest producer of processor chips, as well as memory chip rivals Micron and SK Hynix.

Samsung has also expressed leadership in its experience in intellectual property and engineering to prove that it can defend its position.

These include the use of extreme ultraviolet lithography when manufacturing DRAM chips. Ultraviolet EUV is a step change from deep lithography, which means that increasingly thinner circuits can be drawn into chips. The result is much higher power and energy efficiency.

Samsung, TSMC and Intel to use EUV technology for advanced processor chips. But the South Korean company said it was ahead of competitors in deploying technology in Dram chips, and has used a joint research and development center for processor chips and memory.

Expenditure on Asia’s largest chip makers has also weakened as ordered by Washington, Brussels and Beijing.

Chinese potato chips

IC Insights market research team said Samsung has spent $ 93.2 million in its semiconductor business over the past three years, which is double all of China’s semiconductor suppliers.

“Can governments like the EU, the US and China. . . caught [semiconductor] a technological race with Samsung and TSMC? Considering how far they are. . . governments will have to spend at least $ 30 billion a year for at least five years to have a reasonable chance of success, ”IC Insights said.

South Korean political leaders are making plans for tax cuts and other incentives for champions of chip manufacturers. Analysts expect Samsung to announce this month’s capital expenditure on its processor chip business, including U.S. investment.

However, the Chinese challenge is slowly taking hold making a profit.

Dan Wang, a technology analyst at Gavekal Dragonomics in Shanghai, highlighted Yangtze Memory Technologies and Changxin Memory Technologies, which account for about 3 percent of the Nand and Dram markets.

“Both companies have hired a large number of Korean engineers, who make up most of the global talent on memory chips. Most in the industry today expect the YMTC to become a major global player within three to five years, ”Wang wrote in a statement.

Sinha of Bain said China’s chip sector is showing signs of slowly removing itself from technologies of “western origin”. But he warned that he did not expect industry players around the world to change in the next 3-5 years.

“There are emerging alternatives that will allow ecosystems in China to continue to develop in a rich way,” he said.

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