Why does Samsung want to sell chips? Mobile but Huawei Xiaomi, semiconductor good money!

Samsung intends to sell its Exynos chips to other handset makers to expand market share, foreign media digitimes reported. Samsung's sale of its own chips aims to increase the utilization of silicon wafer factories and increase their share of the global handset processor market, especially in the mid-market, according to people familiar with the situation.

Why does Samsung want to sell chips? Mobile but Huawei Xiaomi, semiconductor good money!

The news came out that some people think Samsung is going to rob MediaTek of the market. Is this so? Let's talk together.

One, Semiconductor, Samsung Electronics 2017 profit one of the major contributors

According to the latest news from the foreign media, Samsung Electronics four quarter profit, is expected to record, to reach $15 billion.

South Korean news agency Yonhap's Financial services Department, recently conducted a securities company survey, a total of 19 brokers, to obtain the latest performance expectations data. According to statistics, Samsung Electronics in the four quarter operating profit is expected to win 16 trillion won, equivalent to $15 billion, an increase of 73% yoy. This profit is also a new record for Samsung Electronics.

In the third quarter of last year, Samsung received an operating profit of KRW 14.53 trillion, equivalent to $13.6 billion.

According to Samsung Electronics forecasts, the semiconductor division in the four quarter operating profit will reach 10.8 trillion won, is more than one times last year.

According to the consulting firm Gartner recently released the 2017 global semiconductor market preliminary statistics report. Samsung Electronics has surpassed its US rival, Intel, as the world's largest semiconductor manufacturer, the report said.

Why does Samsung want to sell chips? Mobile but Huawei Xiaomi, semiconductor good money!

Samsung's sales rose 52.6% to $61.2 billion last year, with a market share of 14.6%, according to data. Intel's sales rose only 6.7% to $57.7 billion, accounting for 13.8% of market share.

In the display panel market, Samsung Electronics is the only OLED screen supplier, and the screen used by Apple iphone x phones this year is all from Samsung.

In a downturn in the mobile phone business, the semiconductor and panel services have replaced the mobile business as the biggest source of profits for Samsung Electronics.

Second, the prosperity behind the Samsung electronic crisis looms

The strength of the semiconductor and panel business makes Samsung one of the world's most profitable technology companies in 2017. But behind Samsung's seemingly prosperous, it hides the risk of a weaker mobile business and a decline in the market share of the semiconductor business.

In December 2017, foreign media Businesskorea had predicted that Samsung would lose about 10% of its market share in 2018. Businesskorea believes that the main reason for the continued fall in Samsung's market share is Apple's competition with Chinese manufacturers. At present, Apple still occupies an advantage in the high-end smartphone market, while China's own-brand handset maker occupies an advantage in the low-end market. The decline in Samsung's mobile phones in 2018 was due to the company's lack of success in China's biggest smartphone market. The report points out that Samsung's market share in China is now only 2.2%.

Previously, Samsung is the world's second largest mobile phone market in India's first brand, currently, Xiaomi has surpassed Samsung in the Indian market, become the market occupies the first mobile phone brand.

Why does Samsung want to sell chips? Mobile but Huawei Xiaomi, semiconductor good money!

In addition, Samsung's advantage in the semiconductor market is not stable. Andrew Norwood, vice president of Gartner Research, says Samsung is currently occupying the market mainly on storage chips and not on the scale of non-storage chips. Moreover, "as China expands its capacity for storage chips, the price of memory chips will be weaker in 2018 years, with NAND flash chips taking the brunt." DRAM memory chip prices will also fall in 2019. We expect Samsung to lose a lot of revenue by then. ”

"In 2017, Broadcom, Qualcomm and NXP had a total revenue of $41.2 billion, just behind Samsung and Intel," Andrew Norwood said, "If Broadcom can finally finalize the two acquisitions and Samsung's storage chip revenue declines as expected, Samsung could be 2019 As the next wave of storage chips declines, market share will fall to third place. ”

He Yi expects Samsung phones to fall or be more serious than we think in the "most" difficult year of the 2018 smartphone, when Chinese handset makers collectively go to sea conquest.

Third, Samsung sells chips, is the strategic adjustment is also helpless

In fact, Samsung sells chips, this is not what news, just before the size of small, influence is small, we are not concerned about it.

Now that Samsung has surpassed Intel as the world's largest semiconductor manufacturer, the perception has improved.

As a matter of fact, since 2017, when Samsung has independently developed its semiconductor foundry business, it has established an operational strategy to fully develop its OEM business.

In December 2017, Samsung's head of the Global Strategy Conference, Kinchinan Kim Ki-nam, announced that Samsung's semiconductor business will be strengthened in the development of non-memory soc (System chips) and foundry businesses in the future. This is the new revenue source plan for the Samsung Semiconductor division in the search for the current addition to the most lucrative storage business in the future.

Samsung has previously been a foundry, focused on the high-end chip market, mainly to meet the needs of its flagship model. Relatively speaking, before the technical process is not fully mature, Samsung also does not have much energy into the low-end chip layout.

But as the demand for low-end chips in the past two years has grown rapidly across industries, Samsung has found that this is the right way to make money. So from 2016 onwards, Samsung began to invest in chip manufacturing in large scale.

In 2017, Samsung invested $ more than 1 billion in Austin's plant in Austin, Texas to boost output to meet the growing demand for mobile and other electronic products.

Also in 2017, Samsung Electronics invested $7 billion in XI ' an to set up a factory that produces 3D NAND memory chips. This chip is used for high-end data storage products on electronic devices such as smartphones, personal computers and data servers.

In response, Samsung will be independent of the OEM business and establish itself as another new business growth engine.

He Yi that Samsung has set up the chip foundry business as a new growth engine on the one hand because of the increase in market demand, is indeed a big business opportunity, on the other hand because the Samsung mobile business is indeed shrinking, and the two years of shrinking more severe, under pressure to move to semiconductor.

This is a smart decision, especially in the future 5G market, Samsung will be more competitive.

Four, for the arrival of 5G

Massive IoT, telematics, ARVR, big Data, cloud computing, smart cities ... 5G is the future.

5 G is another big bonus for smartphones ...

5G era, mastered the advanced semiconductor industry chain of Samsung Electronics will have a greater voice, what TSMC, Qualcomm, Germany, beauty light ... None of this is a cinch.

Why does Samsung want to sell chips? Mobile but Huawei Xiaomi, semiconductor good money!

But before that, Samsung needed to make some necessary preparations, such as getting acquainted with the Golden Masters first. The advantages of their own to tell the future of the king, but also in order to better understand the needs of the owners, the trend of industry development.

Under such a demand, Samsung sells the Exynos chip to other manufacturers is not surprising. Wide net, deep digging potential customers. This should be Samsung's strategy on chip sales.

But He Yi that Samsung Chip foundry business as a new independent business, want to bigger and stronger still have a lot of difficulties. The first is the interdiction of foundry companies, such as the war with TSMC. Next is the chip manufacturer Qualcomm, MediaTek, etc. will also have direct competition.

Samsung is planning to win 25% of the global chip-foundry market in 5 years, according to a senior executive at Samsung's chip foundry business. At present, TSMC has a global market share of about 60%, while Samsung is less than 10%.

To achieve this goal, from 2018 to 2020, Samsung will continue to promote the semiconductor manufacturing process, the planned production of 7 nanometers this year, and 2019 will continue to invest 6 NM and 5 NM research and development. The 4 NM manufacturing process is expected to be introduced in 2020.

At present, TSMC's 7 NM manufacturing process remains technologically advanced, and it has signed more than 40 customers, including mobile communications, high-speed computing and artificial intelligence (AI) in areas such as Apple's iphone processor chip list.

TSMC has said it will invest more than $20 billion to plan the 3 NM process. Obviously, TSMC will be a total sniper against Samsung.

In addition to TSMC, Samsung Chip foundry business will also face from Qualcomm, MediaTek and other chip manufacturers. Samsung's goal is not specific to who, but with Samsung's business in the opposite direction, will be Samsung's rivals.

But in order to get more profits in the coming 5G and IoT era, Samsung has to fight this battle.

A good fight will lead to more competitive advantage in the future.

Why does Samsung want to sell chips? Mobile but Huawei Xiaomi, semiconductor good money!