Gartner, a market information advisory firm, said on Jan. 15 that global DRAM sales growth for 2015 is expected to be more moderate than a year earlier as market demand and supply has been tilting toward a balance.

Gartner’s latest report said that DRAM sales are expected to grow 7.7% before the end of this year, compared with a skyrocketing 31.7% year-on-year increase recorded in 2014.

“DRAM pricing was unusually firm in 2014 due to short supply, which propelled DRAM to be the fastest-growing device type in 2014,” Gartner’s report said.

Gartner said that major DRAM suppliers, including Taiwan’s Nanya Technology Corp (TPE: 2408) and Inotera Memories Inc (TPE: 3474) were benefitted from such an uptrend and reported strong revenue and solid earnings in 2014. Nanya and Inotera, meanwhile, are both DRAM manufacturing arms of conglomerate Formosa Plastics Group (TPE: 1301).

“DRAM supply and demand will be in line in 2015, driving pricing down by a more traditional 16.8% and reducing annual DRAM revenue growth to 7.7%,” Gartner said.

For the semiconductor industry’s sales for 2015, Gartner said that a total of US$358 billion can be expected, which will be 5.4% up from a year earlier, compared with a 7.9% increase seen in 2014.

“DRAM returns to more traditional price reductions and the industry burns off excess holiday inventory,” Gartner said.

The 5.4% growth also represented a downward revision of a previous estimate of a 5.8% increase Gartner made in the fourth quarter of 2014, the advisory firm said. The firm said that industrial applications and wireless applications, which are mainly driven by mobile phones, are expected to be the biggest growth market for semiconductors in 2015.

In the meantime, Gartner said that the industrial electronics segment could enjoy a 9.1% sales growth in 2015, outperforming the entire semiconductor sector. The advisory firm said that the growth in the industrial electronics segment will largely result from solid demand for LED lighting applications for industrial and residential purposes and smart city projects.

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The old Federal Reserve Building at 301 Battery Street in San Francisco was the venue selected by Samsung to introduce their R&D foray into Silicon Valley on Wednesday evening. The usual “We are Samsung, we are the world” presentation proved that Samsung has turned into the 800 Pound Gorilla of the semiconductor industry. The company is investing a good deal of money in the San Jose R&D complex on Tasman Drive, San Jose which they’ll be moving into next summer upon its completion. The inclusion of this information in each of the presenters foil set indicates the center looms large in the companies thought processes.

Bob Brennan, Sr. Vice President Samsung Memory Solutions Lab is responsible for research, development and ecosystem teams in the U.S. is looking for more “top talent” to populate cubicles in their brand new R&D facility under construction in San Jose.

Formerly with Intel for nearly 22 years, Brennan is establishing himself as the undisputed lead for Samsung’s memory R&D in Silicon Valley. His former position with Inel was as Lead Enterprise SoC Architect for the “Microserver” product line.

Most of the press/analysts present were disappointed that Samsung didn’t deliver any news on the memory front that would preempt making announcements at the upcoming “Flash Memory Summit” to be held at the Santa Clara Convention Center August 5th – 7th, 2014. Brennan in conversation mentioned they’re saving important announcements for Tuesday’s keynote 12:00 -1:30 PM (August 5th, Tuesday) in which he will share the podium with Jim Elliott, Vice President, Memory Marketing, Samsung Semiconductor.

Reorganizing the Illusion

Samsung’s traditional R&D approach in Korea uses three competing teams to “develop” new product technology that “will go” to market. The winning team enjoys a much improved environment for promotion and other corporate benefits. The losing teams, recycled into the next team effort, are left with a fierce sense to succeed or leave the company to start their own businesses. The approach worked incredibly well during the companies rise to prominence as a memory and now logic foundry supplier. The problem is that most of the “leading edge” technology has disappeared leaving Samsung with the prospect of having to “grow their own”.

Samsung, one of the proverbial Korean Tigers, is now progressing through a stripe change – finding their way in a new role as an international supplier. One in which the company is investing heavily in new fabrication facilities in China. The Xi’an NAND-Flash mega fab in Shaanxi Province, China is scheduled to go online as a standalone fab by year end – all in the interest “of laying the foundation for a more stable supply of memory products to its customers.” One of the items required by China is the proverbial “technology transfer” – China’s way of acquiring expertise in the highly competitive environment of semiconductor intellectual property.
A presentation made by Hong Hao, Senior Vice President, Foundry Business made clear that Samsung is in sharp competition with TSMC. Samsung’s reputation among the fabless user community suffered a major setback when Apple withdrew their business – Samsung had decided to compete with their customers. Hong, a graduate of the University of Science and Technology of China (BSEE) and Stanford University (MSEE, PhD) has the right credentials for upward mobility in his position at Samsung.

BSN* Take

Samsung is caught between sustaining growth and meeting customer demands without competing with them. Just how far the company can take vertical segmentation without losing their high volume customer base is in question. Additionally they are persona non grata at the IP font of new product development forcing the company to invest in an institution in Silicon Valley whose mission is the discovery of mass markets that will fill the company’s massive fab investments.

Samsung appears to be leaning toward favoring their China business operations in the interest of low cost mass production to supply the company’s increasing vertical market interests – this may help explain the lack of 3D NAND-Flash devices outside of samples. Might this be the subject of a major announcement at the upcoming Flash Memory Summit?

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