Expectations for the growth of Samsung Electronics’ new mobile application processor (AP) ‘Exynos7420’ are taken to be the green light for the DRAM market as well as for SEC’s non-memory business. The industry’s concern over the likely switching of part of SEC’s non-memory production lines to DRAM production has greatly abated.
According to industry insiders on February 10, there are high expectations for Exynos 7420, the AP that SEC will release this year. The likelihood of its use in SEC’s new smartphone Galaxy S6 and the new smartphones of other manufacturers is increasing. It has been revealed that SEC won the order for the foundry supplies to Apple’s new smartphone. Based on this, some forecast that the performance of SEC’s system LSI business will be greatly improved this year. Some mentioned that Qualcomm, regarded as the absolute power in the AP market, might lose some customers in the AP business this year and its performance might deteriorate to a certain extent.
SEC’s non-memory division has had a tough time over the years. Its Apple foundry quantities were turned over to Taiwan’s TSMC, and SEC has been using Qualcomm’s APs rather than its own chips since the Galaxy S3.
In this process, SEC’s semiconductor business division switched part of its non-memory lines with a low operating ratio to the production of DRAMs that had better market conditions, and thus the possibility of DRAM oversupply has been raised. The No. 1 electronics company in Korea has said ‘the expansion of the DRAM capa is not big enough to damage the supply-demand situation in the market,’ but has been unable to completely remove the concern in the market.
“SEC is forecast to use its own APs in new smartphones to a greater extent, and resume the Apple A9 foundry too,” said a semiconductor industry insider. “As the AP is picking up, SEC is less likely to switch Line 17 to additional production of DRAMs.”
SEC’s likelihood of producing more DRAMs is good news to the DRAM industry as well. After the long-drawn ‘chicken game,’ the DRAM market has seen the stable bit growth of SEC, SK Hynix and Micron. Recent years have not seen any sharp drop in DRAM prices due to a sudden increase of production. On top of that, as the possibility of SEC’s greatly increasing DRAM production this year has been lowered, the uncertainty in the DRAM industry, including SK Hynix and Micron, has been reduced.
The possibility of a cutthroat competition among DRAM makers decreased, but the competition over the AP cannot but intensify further this year. With SEC, which has been struggling over the years, getting more aggressive with APs, Qualcomm is also expected to defend the market more aggressively.