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Samsung could beat Intel and become the largest chipmaker

Samsung could beat Intel and become the largest chipmaker

Posted May. 03, 2017 07:10,   

Updated May. 03, 2017 07:26


Samsung Electronics is threatening to beat Intel, the traditional power in the global semiconductor industry. Tech experts have predicted that Samsung's semiconductor sales in the second quarter would top Intel's for the first time. Intel has maintained its No. 1 ranking since survey on chip market started.

Market research firm IC Insights forecast that Samsung Electronics could post 14.94 billion dollars in sales in the second quarter of this year. This is 540 million dollars higher than Intel's second quarter sales estimate of 14.4 billion dollars.

Samsung had repeatedly failed to surpass Intel that boasts of overwhelming prowess in the PC CPU market. Since releasing 486 processor in 1993, Intel has kept its No. 1 position for 24 years in the world chip market. Samsung Electronics had ranked 7th in 1993, and has since done well to rank second in 2006. However, it still had to fall below Intel.

"If Samsung tops Intel in sales, it will be meaningful not only for Samsung but also for other chip rivals," IC Insights said.

The increase in Samsung's chip sales was helped by price hikes of memory chips including Samsung's main product DRAM and Nand flash. DRAM's average price was 2.63 dollars in the first quarter of last year, which soared a whopping 46 percent to 3.83 dollars year-on-year. Nand flash prices, which were 2.79 dollars in the first quarter of last year, surged by 35.8 percent to 3.79 dollars year-on-year. Price hikes of DRAM and Nand flash, which Samsung boasts of the largest global share, helped boost its overall sales. Intel's sales were 13.1 billion dollars in the first quarter of last year, up around 40 percent that of Samsung Electronics.

"With the global semiconductor industry being reorganized into mobile, previous prediction that Intel's prowess that has strength in PC's CPUs would collapse are being materialized," a chip industry source said.

Samsung Electronics posted 6.31 trillion won (5.58 billion dollars) in operating profit in semiconductors in the first quarter of this year, accounting for a historical 64 percent in its overall operating profit.

Price hikes in DRAM and Nand flash have contributed, but system chips are also a big contributor. Mobile application processors for its flagship smartphones have posted sales increases, contributing to a sharp increase Samsung's earnings.

Samsung plans to make steady growth in the system chip market by expanding supply of 10-nano processors and by diversifying into wearable and Internet of Things product lines based on 14-nano processors. Samsung's chip earnings will likely to continue to grow this year thanks to high prices of DRAM and Nand flash, increase in the sales of premium products such as high-volume enterprise SSDs and data center DRAMs, and the effect of super cycle in the chip market.

"If memory chip prices continue the current pace throughout the year, Samsung Electronics can surpass Intel and post No. 1 in global sales this year," IC Insights predicted.

Dong-Il Seo dong@donga.com