Samsung could supersede chip making giant Intel in sales of memory chips, all thanks to the increasing prices of chips. The U.S. firm has enjoyed the top position in the chip industry so far, but according to market research firm IC Insights Inc., the Korean firm could overthrow Intel in memory chip sales in the coming quarter.
Why Samsung can supersede Intel
Intel, which has retained the top spot in chip sales for the last 24 years, will probably come to a lower spot soon. The California-based chip maker has been the top semiconductor manufacturer worldwide since 1993 when it introduced its Pentium-branded processors, notes The Investor. Intel’s Pentium-branded processors sent sales of PCs ramping to new heights.
On Monday, Bill McClean, president of IC Insights, predicted, “If memory market prices continue to hold or increase through the second quarter and the balance of this year, Samsung could charge into the top spot and displace Intel, which has held the No. 1 ranking since 1993.”
The Korean smartphone maker is benefiting from the surge in average selling prices (ASPs) for NAND and DRAM flash. In the first quarter of this year, the DRAM ASPs were 45% higher than in the first quarter of last year, whereas NAND ASPs increased 40% over the same period, according to IC Insights.
IC Insights noted that the Korean chip maker could overthrow the U.S. firm with a modest increase in chip sales, provided that Intel’s second-quarter sales come in around the midpoint of the company’s guidance at about $14.4 billion. The Korean company could record chip sales of $14.6 billion during the second quarter, an increase of about 4.1% year on year.
Is it a one-time event?
The report said that if the Korean company achieves this, it would mark an “achievement not only for Samsung, specifically, but for all other competing semiconductor producers who have tried for years to supplant Intel as the world’s largest supplier.”
However, it could be a one-time event. In an email to EETimes, McClean said, “With the memory market still cyclical, this could indeed be a one year event.”
The firm predicts that memory chip prices will start to decline in the second half of 2017. However, if the prices don’t come down, Samsung could be the winner for the full year.
Nevertheless, the research firm expects the DRAM market to grow 39% this year, while the NAND market will grow by 25%. It is believed that both companies are currently on pace to sell nearly $60 billion in semiconductors in 2017. In the first quarter alone, the Korean company spent $4.3 billion on semiconductor capex and is expected to spend over $15 billion for the full year, 30% more than last year.
Last year was not good for the Korean firm, mainly due to the Note 7 fiasco. This year, however, things are looking good for the company. Recently, it posted its best first-quarter results ever, and now it is on-track to be the world’s biggest chip maker.
On Monday, Intel shares closed up 0.44% at $36.41. Year to date, the stock is up by about 1%, while in the last year, it is up almost 20%.