Samsung starting World’s Largest Semiconductor Factory

Three-Legged Chip Cluster Completed

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Samsung’s three-legged cluster in Korea connecting Giheung, Hwaseong and Pyeongtaek will be completed. As a mother fab that produces advanced NAND chips, Samsung Electronics’ Pyeongtaek plant will become the production base of the fourth-generation 3D NAND chips in 64-layer with the world’s best technology. The world’s largest semiconductor factory will start operating in July. With other competitors, such as Micron and SK Hynix, having not succeeded in mass producing the fourth-generation NAND chips yet, Samsung is planning to dominate the semiconductor market through the so-called “super-gap” strategy.

Samsung Electronics currently operates the system semiconductor plant in Giheung and the DRAM chip plant in Hwaseong. With the NAND flash chip plant in Pyeongtaek, the company has established a dream of semiconductor triangle and prepared the ground for the long-term seizure of power in the global semiconductor market. In addition, Samsung will expand its system semiconductor plant and DRAM plant in Giheung and Hwaseong as well as promote Pyeongtaek plant and the Xian plant in China as the production base of NAND flash chips.

Once the Pyeongtaek plant starts operation in earnest, Samsung’s NAND flash production will dramatically increase. According to market intelligence company IHS Markit, Samsung Electronics has the NAND production capacity of 450,000 wafers a month and more than half of them are 3D NAND memory chips. 3D NAND flash is a type of flash memory in which the memory cells are stacked vertically in multiple layers to increase capacity. As the Pyeongtaek plant is said to mass produce only 3D NAND chips, Samsung Electronics is highly likely to expand its share in the 3D NAND market which sees demand surge.

However, the total 3D NAND production of the Pyeongtaek plant in the second half of this year after starting operation will be 70,000 to 80,000 units as of wafers. An official from the semiconductor industry said, “In the initial stage of operation, production is limited. After one to two years, the rate of operation will hit its stride.” Accordingly, the Pyeongtaek plant is expected to account for 10 to 20 percent of Samsung Electronics’ semiconductor business for a while.

Samsung Electronics seeks to strengthen its unrivaled position in the rapidly growing NAND market by operating the Pyeongtaek plant as soon as possible. NAND is a memory chip that retains data even if power is turned off and its demand in mobile devices, including high-performance smartphones, is skyrocketing.

IHS Markit said that Samsung Electronics’ share in the NAND flash market increased from 32 percent in 2015 to 36.1 percent in 2016. An official from the semiconductor industry said, “When Samsung mass produces the fourth-generation NAND memory chips and lower the price of the second and third-generation NAND products, other producers will be hit hard. Samsung will be able to expand its market share to 40 percent even if other semiconductor companies join forces through the acquisition of Toshiba.”

In particular, Samsung has set up the fourth-generation NAND mass production system and started developing the fifth-generation NAND at the same time. During the annual shareholder meeting held at the end of last month, Samsung Electronics Vice Chairman Kwon Oh-hyun said, “We are planning to continuously widen the technical gap by developing an advanced process, including a fifth-generation V-NAND, in time.”

An expert in the semiconductor market said “Concerns over oversupply and expectations for new demands caused by the fourth industrial revolution co-exist in the market. Samsung’s market dominating power in the future will be determined by how much Samsung can differentiate its products and strategy through the Pyeongtaek plant.”

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