Samsung to inject $10 billion into semiconductor business in 2015

Samsung plans to pump up to $10 billion into its semiconductor business, which drives the South Korean tech giant's best-performing business division.

Samsung plans to inject as much as $10 billion during 2015 into its semiconductor business, as unprecedented demand continues to fuel growth in the company's best-performing division.

"Last year, we invested around 10 trillion won [$9.36 billion] in memory semiconductors," said Jeeho Baek, senior vice president of Samsung's semiconductor division, during a conference call with analysts. "We plan to maintain similar volume this year. We have set DRAM and NAND production ratio to 7 to 3, but will manage this flexibly depending on demand, going forward."

Samsung is increasing its production capacity for memory chips. An additional line that will produce DRAMs is being built at Hwaseong, its main hub for memory chip production in South Korea, which will be completed by the end of the year.

The South Korean tech giant is planning to start construction of a new plant in Pyeongtaek, South Korea, next month. It plans to invest 15.6 trillion won in the new factory by 2017, the same year that it is tentatively set to start production.

The world's second-largest semiconductor vendor also plans to increase offerings that use 3D V-NAND. Only Samsung and Japan's Toshiba have commercialised 3D V-NAND, which stacks cells vertically within a chip to increase storage capacity in the same space.

Baek said the company will offer new 3D V-NAND solid state drives (SSDs) aimed at consumers by the second half of the year, as well as next-generation offers for enterprise-aimed goods.

Samsung cemented its leadership in SSDs last year. According to market research firm IHS, Samsung Electronics held 34 percent market share for 2014, with revenues of $3.996 billion -- double that of runner-up Intel, which posted $1.99 billion in the segment.

Last year, Samsung launched a variety of 3D V-NAND SSDs for the enterprise. The senior vice president said talks with clients were going smoothly, and he expected a surge in orders in the second half of the year.

Samsung insiders said the firm has clinched supply deals with Google and Amazon to supply SSDs for the latter's datacentres. Samsung SDS, the IT service arm of Samsung Group, will also use Samsung-made NANDs when building servers for clients.

Rival makers Toshiba, SK Hynix, and Micron have just begun ramping up efforts to commercialise 3D V-NANDs, but are yet to join the fray, which will likely contribute to prices being stable, allowing Samsung to continue to reap high margins in the area.

For mobile clients, however, supply will still be 2D NANDs. Samsung believes 2D NANDs are still more appropriate for mobile set products, said Lee Myung-jin, head of IR, during the conference call.

"For high-integration, high-reliability NAND flashes, we will use V-NANDs, and for mobile and consumer products, we will use 2D NANDs and secure competence in both product lines,"said Lee.

According to Gartner, the worldwide semiconductor market grew 7.9 percent last year to $339.811 billion. Memory segment grew 16.9 percent and led the growth, it said.

Samsung's contract chip business, called System LSI, will likely enjoy a surge in profit as well. Its migration to 14-nanometer FinFet process ahead of rivals has helped it clinch new clients.

Samsung will produce chips for Apple, Qualcomm, and Nvidia, both in 14-nanometer and 20-nanometer processes, for the latter's next-generation chips, insiders have said.

Source: ZDNet Korea (zdnet.co.kr)