Samsung Electronics Vice Chairman Lee Jae-yong visits the Pyeongtaek plant in Gyeonggi-do on January 4 and checks the EUV exclusive line. Photo = Yonhap News
In the global semiconductor market last year, Samsung Electronics’ operating profit fell to third place, behind Intel in the US and TSMC in Taiwan. The title of the honor of’No. 1 in the memory semiconductor world’ is at the same time giving rise to the dilemma of’Operating profits dancing according to DRAM prices’. The market is paying attention to whether Samsung Electronics can escape from the excessively biased structure with the prospect of a massive increase in DRAM prices this year.
“Samsung Electronics, ranked third in the world for semiconductor sales last year”
According to the financial investment industry on the 24th, Samsung Electronics’ semiconductor division’s operating profit (estimated about KRW 19 trillion) last year was the third largest in the world after Intel and TSMC. Although it jumped 35% from 2019 (14.20 trillion won), it failed to outperform global competitors.
Intel’s last year’s sales, which were unveiled on the 21st, were 77.8 billion dollars (85 trillion won) and operating profit was 23.7 billion dollars (26 trillion won). It recorded the highest sales ever, as if to laugh at the market concerns that the market slid due to the successive declarations of’de-Intel’ by large customers such as Microsoft and Apple.
Samsung Electronics Hwaseong campus semiconductor production plant. Provided by Samsung Electronics
TSMC, a Taiwanese foundry (semiconductor consignment production) company, which recently released its results, recorded sales of KRW 1.3,393 trillion (about 52 trillion KRW) and operating profit of Taiwan KRW 5665 billion (about 22 trillion KRW) last year. . Sales are 20 trillion won or more lower than Samsung Electronics (estimated about 73 trillion won), but operating profit is rather 3 trillion won. TSMC’s operating profit in 2019 (14.72 trillion won) was similar to that of Samsung Electronics (1.42 trillion won), which widened the gap last year.
Samsung Electronics, which ranked first in both sales and operating profits in 2017-2018 during the memory semiconductor super boom, went on to take second place after Intel, and fell to third place last year after losing to TSMC.
Prospect of “60 trillion won in operating profit next year due to the booming DRAM”
Such excitement stems from the difference in operating margins of the three companies. Samsung Electronics’ semiconductor division’s operating margin, estimated at 26% last year, is lower than that of TSMC (42.3%) and Intel (30.4%). In the industry, unlike Samsung Electronics’ overwhelming DRAM competitiveness, the weak point is that the operating margin of system semiconductors and foundries is falling.
Paradoxically, in the stock market, based on DRAM prices, which hit the bottom of last year, Samsung Electronics’ earnings this year and next year are predicted to improve significantly. This year’s memory division’s operating profit (estimated KRW 26 trillion) is expected to jump 46% from last year’s (estimated KRW 17 trillion). The prospects (Kiwoom Securities) come out. Earlier, Samsung’s record-high semiconductor operating profit was 4,475 trillion won in 2018.
‘Red light’ to foster future food system semiconductors
Samsung Electronics’ worries are when DRAM prices fall again. This is because a sharp drop in operating profit is inevitable under the current DRAM-focused structure. Last year, Samsung Electronics’ system semiconductor and foundry operating profit stood at 1.7 trillion won, accounting for only 8% of the total semiconductor operating profit.
In addition, the central axis of the global semiconductor industry is rapidly moving from semiconductors for data storage such as DRAM and NAND flash to system semiconductors that act as’brains’. The proportion of system semiconductors in the total market (56.5%) exceeds twice that of memory semiconductors (26.3%). In particular, in the field of system semiconductors, the U.S. has an overwhelming market share of 60%.
tsmc Samsung Foundry Semiconductor. Hankook Ilbo data photo
For this reason, Vice Chairman Lee Jae-yong is concentrating all of the group’s capabilities by unveiling’Semiconductor Vision 2030′, which will invest 133 trillion won to become the No. 1 system semiconductor by 2030. However, with Lee’s reincarceration recently, Samsung Electronics”Semiconductor Vision’ has also turned on a red light.
An industry insider pointed out, “In the foundry sector, TSMC is expanding the gap with Samsung by predicting the highest investment ever this year,” he said. “It is true that Samsung’s response conditions are not easy due to the absence of the total number.”
Kim Dong-wook reporter [email protected]
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