Samsung is one of the largest chip makers in the world. The company already holds big-name clients like Qualcomm and Apple, and many firms use memory and storage chips made by Samsung. However, the company is set to face a strong threat from Tsinghua Unigroup Ltd., a Chinese government-affiliated firm that is aspiring to become the countries largest chipmaker.
Zhao Weiguo, the billionaire president of Tsinghua Unigroup Ltd., told Bloomberg in an interview that the company plans to invest a whopping $30 billion in the coming years to grow its semiconductor business. This figure is more than twice as large as Samsung's investment budget of $11.5 billion for the current year. Experts believe this investment to fuel an already stiff competition in the chip industry.
Tsinghua Unigroup has already purchased chipmakers Spreadtrum and TRA Microelectronics. It has also been eyeing to take over Western Digital and Micron Technology. It was reported last quarter that several Chinese display and chip manufacturing brands were trying to acquire Samsung's partner firms, which could negatively affect the South Korean smartphone giant.
Samsung's operating profit is expected to fall to KRW 4.9 trillion ($4.9 billion) in the first quarter due to stiff competition in the DRAM market. The estimated profit would be a record low for Samsung since Q3 2014. Tsinghua Unigroup, which is funded by Tsinghua University, attempted to invest in SK Hynix but failed.
China's aggressive move to increase its foothold in the global chip business may become a threat to Korean firms like Samsung and SK Hynix. These companies jointly have a market share of 74 percent and 43.7 percent in the memory (DRAM) and storage (NAND flash) markets, respectively.
