Samsung Electronics faces the possibility of having to buy DRAM chips from rival suppliers such as SK Hynix for the first time, as its surging smartphone business means its own manufacturing arm is unable to cope with rising demand.
Shin Jong Kyun, head of Samsung's mobile business, admitted the company, which makes more than half of the world's DRAM chips, may have to buy the component from SK Hynix for the first time.
The supply crunch is not just caused by Samsung's popular Galaxy smartphone and tablet devices, but rising demand for the memory chip by other phonemakers such as Apple, Nokia and HTC. Kim Sung In, an analyst at Kiwoom Securities, told Bloomberg the crunch will be most felt in the third quarter as most companies would release new devices then, and it is not limited to just DRAM chips.
Kim said: "Not only DRAM chips, but all memory chips for mobile devices show signs of shortages. Samsung's biggest chip customer is itself and things will only get out of hand with the approacch of the third quarter, typically the strongest time of the year."
On Wednesday, SK Hynix posted a 2 percent quarter-on-quarter revenue bump on the back of growing DRAM demand by data center operators for their PCs and servers. It did note it is gearing up for the growing demand for mobile chips though, and will focus on mobile DRAM and eMMC going forward.