Samsung Electronics Co, the world’s second-largest maker of semiconductors, began production at its most advanced factory yesterday, widening its lead in the market for computer-memory chips.
Samsung began mass production yesterday of chips known as DRAM, or dynamic random access memory, with a circuitry narrower than 30 nanometers, the first in the market, at the plant, the Suwon, the company said in an e-mailed statement.
The 12 trillion won (US$10 billion) factory in Hwaseong, outside Seoul, has the industry’s biggest capacity, according to the statement.
The move paves the way for Samsung to extend its lead in the industry because miniaturization allows the company to pack more memory into each chip, making them cheaper to produce. Rival producers in Japan and Taiwan are scaling back investments as slowing personal-computer sales dampens demand.
“Again, they’re boasting about their ability to further cut costs when everyone else is struggling,” Kim Chang-yeul, a Seoul-based analyst at Mirae Asset Securities, said of Samsung. “They’ll be even more profitable.”
The move will help Samsung further increase its share of the global DRAM market, where about four out of every 10 chips sold are already from the South Korean manufacturer, Kim said.
Shares in Samsung fell 2.8 percent to 790,000 won at the 3pm close of trading in Seoul, while the benchmark KOSPI -declined 2.9 percent.
Some chipmakers have responded to the fall in prices by reducing output. Nanya Technology Corp (南亞科技), Taiwan’s top DRAM maker, cut production because of a glut, Nanya vice president Pai Pei-lin (白培霖) said on Sept. 14. Inotera Memories Inc (華亞科技), a DRAM venture between Nanya Technology and US memory chip giant Micron Technology Inc, also lowered DRAM output, company president Charles Kau (高啟全) said the same day.
The price of the benchmark DDR3 2-gigabit DRAM has slumped more than 70 percent over the past 12 months as PC sales slowed, according to data from Taipei-based DRAMeXchange Technology Inc (集邦科技), operator of Asia’s largest spot market for semiconductors.
Samsung said it plans to further shrink its chips to less than 20 nanometers next year, while increasing output of NAND flash memory, which stores data in -consumer gadgets such as Apple Inc’s iPad.
Elpida Memory Inc, Japan’s top DRAM chipmaker, said on May 2 that it aimed to start mass production of chips narrower than 30 nanometers, or billionths of a meter, in July, possibly ahead of Samsung. The Japanese chipmaker said this month that the circuitry of its chips had not yet reached 30 nanometers.
On Thursday last week, Elpida said it was considering relocating part of its DRAM chip production to Taiwanese subsidiary Rexchip Electronics Corp (瑞晶電子) from a Hiroshima plant as part of its efforts to counteract the deteriorating DRAM market and a strong yen.
The Taichung-based Rexchip, 63 percent owned by Elpida, operates a 12-inch wafer fab and has suspended the planned construction of a second plant because of the industrial slump.
Additional Reporting By Lisa Wang
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