Samsung Electronics Vice Chairman Lee Jay-yong’s ambitious project to make the electronics giant a behemoth in the non-memory segment has been launched in earnest. Last January, Vice Chairman Lee, recognizing the growth potential of the non-memory segment like CPUs, mobile AP, image sensors and foundries, unveiled a vision and investment plan to achieve the vision of becoming a No. 1 non-memory maker, in addition to its current position as memory-chip leader.

The Semiconductor Vision 2030, announced on April 24, calls for cumulative investments worth 133 trillion won by 2030 - 73 trillion won for R&D and 60 trillion won for facility investments. The latest master plan also contained a strategy to expand non-memory production using the new extreme ultraviolet line in Hwaseong Gampus in Gyeonggi-do.

Explaining the background of the latest investment plan, a Samsung Electronics official said Samsung Electronics has so far maintained a leadership role in the global memory market, contributing to shoring up the national economy, and it is designed to explore new opportunities and growth potential of bigger market system chips.

Non-memory chips play significant roles in the IT sector. For instance, processors, communication chips and image sensors play the role of the human brain, mouth and eyes. In particular, there are plenty of companies specializing in each segment, like fabless chip makers, which outsource chip making to a production company or foundry. Currently, about 8,000 kinds of products are put on the market since each process is specialized and products are churned out in a format of a few products and mass production.

Even though each market survey institution gives different figures, the market consensus has indicated that the memory segment has a 35 percent stake in the global chip market, whereas the non-memory segment accounts for the remaining 65 percent.

The research company Gartner reported that Samsung Electronics took up a 15.9 percent stake in the whole chip market to retain the No. 1 position, surpassing Intel. Samsung’s dominance is owed to its overwhelming market control of DRAMs and NAND flesh chips, it said.

When it comes to the system chip sector, it is a different story. For example, frontrunners of the non-memory segment are Intel of CUP, Qualcomm of the mobile process segment, Broadcom of network chips, Sony of image sensors and TSMC of foundries.

The Strategy Analytics reported that QualComm of the United States is a juggernaut with a 37 percent share (based on shipments last year) in the mobile segment, equivalent to the brain of the smartphone, and Samsung Electronics ranked 4th with a 12 percent stake.

The TSR reported that Samsung Electronics placed 2nd with a 23.3 percent share, trailing the leader Sony with a 26.1 percent share in the market of image sensors transforming images into digital signals.

Samsung Electronics’ vision of rising to a non-memory leader may be construed as the company’s determination to enhance its full-fledged leadership in the global chip market in terms of both quality and quantity.

Early this year, Vice Chairman Lee stressed the need for strengthening the competitiveness of the non-memory segment such as automotive electronic chips, sensors and foundries on top of continuous technology innovation to overcome the market stagnation of the memory segment. In order to shore up its presence in the non-memory segment, Samsung Electronics needs to produce more advanced products than rivals through massive investment and R&D activities and expand its clientele.

A few chip makers are capable of producing modem chips for 5G smartphones. They include QualComm, Intel, both of the United States, HiSilicon of China, as well as Korea’s Samsung Electronics.
On the back of the looming popularity of 5G smartphones, the demand for modem chips is expected to surge. A foreign media outlet reported that Apple asked for Samsung Electronics to supply 5G modem chips, but the latter refused to accept the offer, saying that supplies cannot be met. It shows that more advanced products play more leverage in enhancing market power.

The Strategy Analytics reported that Samsung Electronics is predicted to see its share in the global 5G communications market climb from 7.5 percent this year to 20.4 percent in 2023, but QualComm is forecast to witness a drop in its comparative share from 87.9 percent to 46.1 percent.

Samsung Electronics’ Semiconductor Vision 2030 may be interpreted as the company’s scheme to diversify its business portfolios in return for its dependence on the memory segment.