Fri, Sep 30, 2011 - Page 12 News List

Samsung to cut production output of PC DRAM chips

By Lisa Wang  /  Staff Reporter

Samsung Electronics Co, the world’s biggest PC DRAM maker by market share, yesterday said it was cutting PC DRAM production to less than 30 percent of overall memorychip production because it expected the lengthy industrial downturn to continue for the foreseeable future.

In addition, Samsung expects the semiconductor industry to grow at a slower rate next year as the economic situation in developed countries continues to deteriorate, Kwon Oh-hyun, president of Samsung’s newly created device solutions division, told a media briefing in Taipei.

“The uncertainty [on the macroeconomic side] is too big,” Kwon said. “Before this problem is resolved, I’m afraid growth in the semiconductor industry will slow down in 2012 and technological strength will be more of a factor in determining market [position].”

Early this month, market research company Gartner Inc cut its revenues forecast for the global semiconductor industry to 4.6 percent growth annually from its previous estimate of 8.6 percent.

“The DRAM industry will continue to be in a tough situation for a long time because DRAM chips are mostly used in PCs and the PC industry is also experiencing difficult circumstances,” Kwon said.

This year, global semiconductor revenues are likely to shrink 0.1 percent annually to US$299 billion, with the PC DRAM sector suffering the brunt of that fall with an annual decline of 26.6 percent in revenues on depressed PC demand and falling prices, Gartner said.

To cope with a prolonged industrial downturn that began in the third quarter of last year, Samsung would continue to reduce PC DRAM production and shift more production to DRAM chips used in mobile devices and servers, Kwon said, adding that chips used in smartphones and mobile devices would be bright spots in the lackluster semiconductor industry next year.

Currently, non-PC DRAM chips, which include DRAM chips used in mobile devices and servers and specialty DRAM chips, account for 70 percent of Samsung’s memory chip production, he said.

Taiwan’s top PC DRAM makers Nanya Technology Corp (南亞科技) is also looking to move away from volatile PC DRAM industry and has already decided to allocate about half its PC DRAM production to DRAMs used in mobile devices and servers, and to contract chip business by the end of this year.

Talking about new contract chip manufacturing business, Samsung said it would focus on making chips used in mobile devices and application processors because it was unrealistic for a latecomer like Samsung to provide full line production services.

Samsung entered contracted chip manufacturing in 2005 to compete with Taiwan Semiconductor Manufacturing Co (台積電), the world’s biggest contract chipmaker.

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