Until the third quarter of this year, TSMC, a Taiwanese foundry (consigned semiconductor production) company, was selected as the’leading’ of the global semiconductor industry. In May, it was shaken by the U.S.’Huawei transaction ban’, but it succeeded in recovering by sweeping orders for Apple’s smartphone application processor (AP). In July, the market capitalization of the world’s semiconductor companies exceeded 400 trillion won first.
Last month, Samsung Electronics’ reversal began. This month, the stock price soared 16.6%, surpassing the market cap of 400 trillion won at a fierce pace, and beat TSMC on the 24th. At the same time, the memory and system semiconductor business conditions improved significantly.
Foundry in’Full Operation’
According to the semiconductor industry on the 25th, the growth potential of the’Foundry’ business is regarded as a decisive opportunity for Samsung Electronics to exceed the market cap of 400 trillion won on the 23rd of last month. This year, with 5nm (nanometer, 1nm = 1 billionth of a meter) ultra-fine process technology, Qualcomm’s latest AP’Snapdragon 888′ consigned production contract was obtained, and NVIDIA’s graphics processing unit (GPU) volume was also brought. In terms of market share, the gap between TSMC (55.6% in 4Q) and Samsung Electronics (16.4%) is not small, but it is evaluated that Samsung Electronics is ahead of the sales growth potential.
The foundry outlook for next year is more positive. As the 5th generation (5G) mobile communication and artificial intelligence (AI) market is growing, orders for 5G communication chips and GPUs are pouring out from fabless (design specialists without production facilities). It is said that orders are being pushed until the end of next year. Foundry sales for next year are expected to increase by more than 20% from this year’s estimate (1.5 trillion won).
DRAM enters’long-term boom’ next year
Recently, Samsung Electronics”memory semiconductor’ capability has emerged. According to the market research firm Trend Force, Samsung Electronics is ranking first in the global DRAM and NAND flash markets with 41.3% and 33.1% share (as of the third quarter), respectively.
Until last month, the memory semiconductor industry was not good. The fixed DRAM transaction price (based on the DDR4 PC DRAM product) fell from $3.31 in June to $2.85 in November. The impact of reducing orders from data center companies with accumulated inventory was large.
The atmosphere has changed this month. The spot price of DRAM, which serves as a leading indicator of the industry situation, jumped 24.5% from the end of last month ($2.77) to 3.45 dollars on this day. There was also a power outage at the Taiwan plant of Micron, the third largest in the world, but the industry is focusing on the analysis that “reflected next year’s DRAM super cycle.”
Mobile DRAM demand has turned to recovery. The expansion of 5G smartphone launches is large. Server DRAM purchases from Google and Amazon have also resumed. Researcher Yangpaeng Kim, a researcher at the Institute for Industry Research, analyzed that “the demand for memory semiconductors is increasing due to the influence of AI and 5G,” and “the global semiconductor industry has entered an upcycle.”
26% increase in operating profit next year
In addition to semiconductors, there are high expectations for Samsung Electronics’ other flagship businesses such as smartphones. This is because new products such as the Galaxy S21 and mini LED TV will be released from early next year. Samsung Electronics’ earnings next year are expected to continue’highly advanced’. According to F&Guide, a financial information provider, Samsung Electronics’ sales consensus for next year (average of securities firms’ forecasts) is 259,6954 billion won and operating profit is 46,5607 billion won. Sales are 9.2% and operating profits are 26.2% higher than this year. There is also a forecast that the operating profit will exceed 50 trillion won. Semiconductor operating profit is expected to reach 30 trillion won, a 50% increase from this year’s estimate (about 20 trillion won).
However, there are many prospects that this year’s 4Q earnings, which will be released early next month, will fall short of expectations. Operating profit is expected to reach 9.9 trillion won, 20% less than in 3Q (12,353.2 billion won). It is analyzed that the decline in semiconductor prices from October to November, a decrease in smartphone shipments, and a fall in the won-dollar exchange rate have had a negative impact.
Reporter Hwang Jeong-soo [email protected]