Samsung likely to oust Intel as memory chip king
Print Edition
INTEL’S more than two decade-long reign as the king of the silicon-based semiconductor was poised to end yesterday when South Korea’s Samsung Electronics elbows the US manufacturer aside to become the leading maker of computer chips.
Samsung reported record-high quarterly profit and sales yesterday. Analysts say it likely nudged aside Intel in the April-June quarter as the leading maker of semiconductors, the computer chips that are as much a staple of the 21st century wired world as crude oil was for the 20th century.
Samsung said its semiconductor business recorded 8 trillion won (US$7.2 billion) in operating income on revenue of 17.6 trillion won during the April-June period.
Intel, which was set to report its quarterly earnings later yesterday, was expected to report US$14.4 billion in quarterly revenue.
On an annual basis, Samsung’s semiconductor division is likely to overtake Intel’s sales this year, analysts at brokerages and market research firms say.
Mobile devices and data are the keys to understanding Samsung’s ascent as the new industry leader, even as its de facto chief is jailed, battling corruption charges, and it recovers from a fiasco over Galaxy Note 7 smartphones that had to be axed last year because they were prone to catch fire.
Manufacturers are packing more and more memory storage capacity into ever smaller mobile gadgets, as increased use of mobile applications, connected devices and cloud computing services drive up demand and consequently prices for memory chips, an area dominated by Samsung.
Just as Saudi Arabia dominates in oil output, Samsung leads in manufacturing the high-tech commodity of memory chips, which enable the world to store the data that fuels the digital economy.
“Data is the new crude oil,” said Marcello Ahn, a Seoul-based fund manager at Quad Investment Management.
For over a decade, Samsung and Intel each ruled the market in its own category of semiconductor.
Intel, the dominant supplier of the processors that serve as brains for personal computers, has been the world’s largest semiconductor company by revenue since 1992 when it overtook NEC.
Samsung is reaping the rewards of dominating in the memory chip market which is growing much faster than the market for computers that rely on processing units dominated by Intel, said Chung Chang Won, a senior analyst at Nomura Securities.
“Greater use of smartphones and tablet PCs instead of computers is driving the rise of companies like Samsung,” Chung said.
Since 2002, Samsung Electronics has been the largest supplier of memory chips.
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