Chinese smartphone manufacturers have given Samsung a run for its money in the global smartphone market and now they have their sights set on Samsung's lead in the semiconductor market. The country purchases almost a fifth of the global DRAM supply and has been funding the creation of domestic memory producers to reduce imports and establish Chinese footing in this lucrative sector.
Samsung hasn't turned a blind eye to these moves and it has ramped up its investments in this division over the past few years. The company is using its deep pockets to crush memory chip rivals and feels that it's in a strong enough position to not feel threatened by Chinese upstarts.
Samsung working to extend gap to rivals
Kim Ki-nam, head of Samsung's chip business units, has downplayed the threat of Chinese rivals in this segment of the market. “Technological barriers in chips are relatively higher than in other industries,” he told reporters during Samsung's annual shareholders' meeting today, adding that “It takes more than just large short-term investments to overcome such difficulties.”
Samsung's chip business is a cash cow in the true sense of the word. Its revenues were over $100 billion last year which accounted for 45 percent of the company's total revenue for 2017. It accounted for 75 percent of Samsung Electronics' annual operating income.
So it comes as no surprise that Samsung is keeping a close eye on what the Chinese are doing. Ki-nam mentioned that Chinese firms are heavily investing in all types of semiconductors including memory chips but cautioned that the technology gap can't be narrowed by short-term massive investment. He said that Samsung will focus all of its energies to ensure that it continues to lead this sector.
Samsung's strategy is to expand its second-generation 10nm DRAM products and increase gaps to its rivals by developing third-generation 10nm DRAM and sixth-generation NAND flash in the near future. Samsung is also going to focus on meeting the rising demand for chips from the Internet of Things, 5G and automotive industries.
