Samsung prepares to grow non-memory chip sales -- At the same time, company vows to boost DRAM output
News article received, Saturday, June 26, 1999 10:37:43 AM EST
Jun. 25, 1999 (Electronic Buyers News - CMP via COMTEX) -- Kiheung, South Korea - Samsung Electronics Co. Ltd. wants to increase non-memory chip sales 40% by 2001, but has no intention of short-changing its globally dominant DRAM and SRAM businesses, according to senior executives at the company.
Yoon Woo Lee, president and chief executive of Samsung's Semiconductor division, told EBN in an interview at his office here that the company's goal is still to reach 50% of its sales in non-memory ICs. "However, we will do this by growing non-memory chip sales, not by cutting back our memory chip sales," Lee said.
On the other side of the Pacific, Daeje Chin, executive vice president and chief executive of Samsung's System LSI division, last week spelled out some of the company's non-memory strategies in an address to the PC Expo Conference in New York. Chin said Samsung's target is to boost System LSI chip sales from the division's current $1.2 billion a year to more than $2.5 billion in 2001. To do this, the company plans to invest $1.2 billion in R&D and capital spending for non-memory chips over the next three years, he said.
The expanded focus doesn't mean Samsung will back away from DRAM, Lee said. He predicted the company will increase DRAM bit growth this year by more than the industry's traditional 70% average, although he declined to estimate Samsung's precise DRAM output jump.
Lee said Samsung will upgrade existing fabs in Korea to 0.18-micron processes, as well as equip an existing empty shell that will become Line 9. When the new line begins operation in the fourth quarter, it will be used primarily to make Direct Rambus DRAM and 128- and 256-Mbit SDRAM, he said.
Lee added that during Asia's financial crisis, Samsung cut its semiconductor capital spending drastically, but said spending is now gradually returning to traditional levels. He noted that Samsung originally planned chip capital investments of about $1 billion this year, the same as in 1998. But the cost to equip Line 9 prompted the company to boost that level to $1.2 billion. "We may need to increase capital investment again slightly," Lee said.
New York-based Morgan Stanley Dean Witter & Co. has estimated the latest Samsung capex for 1999 will come in at about $1.78 billion.
In addition, Samsung next year will start building a 256-Mbit DRAM fab. Lee said nothing has been announced yet, but the prospectus for a new $3.1 billion stock-rights offering being floated by Samsung indicates that some of the funds will be used to start the 256-Mbit fab, as well as to pay for other product development and to retire some of the company's debt.
Lee stressed that Samsung will focus on higher-margin, next-generation DRAM and application-specific memory chips, and said the company is holding to its current 64-Mbit DRAM production levels of 15 million to 20 million units per month. Samsung also is producing more than 2 million 128-Mbit DRAMs per month, a figure expected to increase sharply.
By contrast, analysts said rival Micron Technology Inc. has ramped up 64-Mbit equivalents to 25 million to 30 million per month, and may reach 40 million to 45 million per month when it turns on production later this year at newly upgraded fabs it purchased from Texas Instruments Inc.
In other technology areas, Samsung said it is boosting its telecommunications-chip production, especially CDMA chips for wireless phones. Production of these devices will be directed exclusively into Samsung's wireless-communications operation. "We won't be selling CDMA chips on the outside market," Lee said. |
