Industry sources said on Tuesday that Samsung Electronics plans to expand its NAND flash factory production line in Xi'an, China, to meet the growing market demand.
The South Korean tech giant plans to expand its facilities later this month, and Kim Ki-nam, Samsung’s chief of chip operations, and Chinese provincial officials recently participated in the groundbreaking ceremony.
According to sources, Samsung plans to invest US$7 billion in the expansion project in the next three years.
Last month, Samsung also approved a preliminary investment plan to build a second chip line in Pyeongtaek, 70 kilometers south of Seoul. Samsung had previously had a chip line in the city.
According to industry data, Samsung Electronics surpassed Intel last year to become the world's largest chip maker in terms of revenue, taking away the latter's throne since 1992. It is reported that Samsung’s chip revenue in 2017 was US$69 billion, which exceeded Intel’s US$63 billion.
This shift underscores that Samsung has transformed from the original low-cost TV manufacturer to a key component supplier for smart phones and other modern computing devices. In addition, this also proves Samsung's growth in the field of memory chips.
It is reported that Intel's processor in the global computer market share of up to 90%, the company's condition last year is not bad, revenue increased by 6% year-on-year. However, success in the computer market alone is no longer sufficient. Today, smartphone sales have surpassed PCs, and storage chips have become key components of smart phones, but Intel has only recently begun to enter this market. The memory chip has also entered many other new areas, such as self-driving cars and so on.
Ironically, although Samsung was successful in the storage chip market, Intel created this business in the 1960s. Due to increasing competition from Japanese companies, Intel withdrew from the memory chip market in the early 1990s and then re-entered recently. Last year, Intel’s fastest growing business was storage chips, but it had a long way to go to catch Samsung.
Many years ago, Samsung Electronics obtained licenses from its Japanese counterparts and began to enter the memory chip market. Today, Samsung has also entered the traditional Intel site, not only to produce its own mobile phone processor, but also for chip giant Qualcomm foundry.
Industry sources disclosed at the beginning of the year that Samsung Electronics also plans to sell its own Exynos processor to other smartphone manufacturers in order to expand its share of the global mobile phone processor market.
Sources said Samsung’s move aims to increase the utilization of its fabs and increase Samsung’s share in the smart phone chip market, especially in the mid-range smartphone market. For Samsung’s move, MediaTek, a Taiwan-based chip company that focuses on the midrange market, is likely to bear the brunt.
Market observers pointed out that the growth of global smartphone shipments has been significantly slowed down. For Samsung, expanding smart phone chip market share is an important marketing strategy. The strategy is expected to put Samsung in a better position to benefit from the official launch of the 5G mobile communications network in 2020, and at the same time it will push the global smart phone chip market into greater turmoil.