Tag: SK Hynix

SK Hynix in talks to buy Tosh’s memory chip business

South Korean chipmaker SK Hynix is in talks with Japanese financial investors about forming a consortium and jointly bidding for Toshiba’s memory chip business.

According to the Korea Economic Daily which found it difficult to get anyone to talk on the record, SK Hynix, the world’s No. 2 memory chip maker behind Samsung plans to give a preliminary bid for the Toshiba chip business today.

The Japanese firm put up the business for sale because it needs the cash to deal with its $6.3 billion writedown caused by the fact that invested in a bankrupt nuclear unit Westinghouse. Tosh has applied to bankrupt Westinghouse and write off its assets.

Tosh’s memory business has been doing well and would make a good partner for SK Hynix if it can gather together enough readies to buy it.

Foxconn out of running for Toshiba business

Taiwan’s Foxconn, the world’s largest contract electronics maker, is not a favoured bidder for Toshiba memory chip business because it is too close to China.

Apparently the Japanese government has told Tosh that flogging its flash business to China  would be opposed because it means the transference of key technology.

Foxconn has plants in China, and the Japanese fear that putting the tech close to the Chinese would result in the tech leaking out due to industrial espionage and internal corruption.

Toshiba, the second-biggest NAND chip producer after Samsung, wants to sell the majority – or all – of its marquee flash-memory chip business, as it seeks to make up for a $6.3 billion writedown from its US nuclear unit Westinghouse.

Toshiba is valuing its chip business at $13.1 billion, people familiar with the matter have said. Initial bids are due by the end of the month.

Foxconn said last week it was “definitely bidding” for Toshiba’s chip business and that it was “very confident” it could buy into it.

Yesterday the Nikkei business daily reported that Foxconn has approached   SK Hynix to explore a joint bid.

TSMC, another Taiwanese firm and the world’s largest contract chipmaker, is also deeply interested in Toshiba’s chip unit.

 

SK Hynix expands memory chip operations

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SK Hynix is investing $2.7 billion in its home country and China to boost memory chip production.

There is a bit of a boom in demand for memory chips and Hynix wants to take advantage of that.

Most of the investment will build a new plant to make NAND flash chips used for long-term data storage.

A spokes Hynix said that to grow further, it is important to secure production facilities in advance to deal with NAND Flash market growth to be led by 3D NAND solutions.

Cash will be spent on the NAND chip plant which will be in South Korea, and a big chunk to boost DRAM capacity at its existing facilities at Wuxi, China.
Analysts think strong demand for memory chips will likely continue in 2017 as it will take several years for capacity spending announced by key players to yield meaningful production growth.

Supply will also be constrained as chipmakers shift to new production methods. In the NAND market, many manufacturers are converting existing production lines to high-end 3D NAND technology.

Samsung likely to lead us through the gloom

SamsungWhile the world’s semiconductor industry is in a bit of a sulk, Samsung is expected to cope much better and might make a bob or two.

Intel has had to cut 12,000 jobs, Qualcomm has said fiscal third-quarter chip shipments could fall as much as 22 percent and SK Hynix saw a 65 percent slide in quarterly operating income – its weakest result in three years.

Samsung, while hurting, is not hurting as much. In fact some analysts expect to see a drop of 10 percent in January-March from a year earlier. But that is really a scratch instead of the others, which have more or less lost limbs.

This is because it is in the right place as clients shift towards premium power-conserving DRAM chips for smartphones, as well as solid state drives for data storage using 3D NAND chips.

The technological gap between Samsung and its competitors in fields such as DRAM and NAND has been widening.  Samsung’s chip operating profit is expected to be nearly five times that of SK Hynix.

Samsung also runs the world’s biggest smartphone business, giving it a captive customer for its chips that none of its rivals have.

Healthy initial sales for Samsung’s new flagship Galaxy S7 smartphones are expected to be the main driver of first-quarter operating profit, which the firm has said likely rose 10.4 percent from a year earlier to $5.8 billion.

Samsung’s NAND chip prospects are also expected to do well. Samsung was the first to mass produce NAND flash chips using a technology called 3D NAND, helping it assume a dominant position in higher-margin products such as solid-state hard drives for computers and servers.

Some analysts think that Samsung’s  NAND revenue will climb 16 percent and NAND operating profit to jump 69 percent this year. Shipments will also likely outpace the industry average, allowing Samsung to seize more market share.

NAND rivals Toshiba , SK Hynix and Micron are three years behind technology-wise. Samsung has better production technology for DRAM chips, saying the firm is ahead of its closest rivals by at least a year.

Samsung commanded 58 percent of the mobile DRAM market as of the fourth quarter of 2015, according to TrendForce. Mobile DRAM revenue also accounted for more than half of Samsung’s overall DRAM sales for October-March.

Chip revenues fell in 2015

Intel bus - Wikimedia CommonsA report from Gartner said revenues from semiconductors worldwide amounted to $333.7 billion last year, a 1.9 percent fall compared to 2014.

Gartner said a number of factors accounted for the decline including oversupply, a strong dollar and weak demand for electronic kit.

Memory fell by 0.6 percent during the year.

Intel, which has been the top semiconductor company for years, saw a 1.2 percent decline in revenues because of slow demand for PCs. Intel has a 15.5 percent market share and has been number one for 24 years.

Samsung grew by 11.8 percent and held number two position, followed by SK Hynix, Qualcomm, Micron, Texas Instruments and Toshiba.

Samsung’s growth was helped by its memory business.

A price war in manufacturers of NAND memory hurt the profitability of the manufacturers specialising in that sector but did mean the price of solid state drives fell.

DRAM prices will continue to free fall

Samsung DRAMMarket research company Trendforce predicted that prices of DRAM will keep falling in 2016.

Trendforce believes that the DRAM market is an oligopoly and because of this DRAM manufacturers can stay profitable even though they’re continuing to make too many modules.

Avril Wu, a research director at Trendforce, said that demand and supply bit growth rates will be 23 percent and 25 percent respectively.

Average prices will drop and growth will depend on manufacturers shifting their production towards 20 nanometre processes.

SK Hynix and Micron will move to that process next year – Samsung is already producing modules based on that technology.

Wi said that DDR4 will replace DDR3 – that’s already happened in the server market but will shift to new PCs and notebooks next year.

China is attempting to become a player in the DRAM market but the “oligopoly” of Micron, SX Hynix and Samsung will let them maintain their grip on the market.

DRAM revenues dropped in the third quarter

Samsung DRAMOver production of dynamic random access memory (DRAM) fell in the third quarter by 1.2 percent – bucking the trend usually followed in the quarter.

Manufacturers are moving production from PCs to server and mobile memory because of stable prices and higher margins, according to analysts at DRAM Exchange.

The share of mobile DRAM, used in smartphones, rose from 33.7 percent in the second calendar quarter of this year to 40 percent in the third quarter.

However, according to Avril Wu, an assistant vice president at DRAM Exchange, said that oversupply will continue for quite some time and DRAM prices are expected to fall in the immediate future.

The two Korean giants – Samsung and Hynix – continued to have similar operating margins in the third quarter compared to the second quarter – that is to say 47 percent and 28 percent respectively.

However, Micron, the only USA DRAM manufacturer, saw its profits margin drop to 15 percent during the third quarter.

Smartphones save DRAM’s day

Samsung DRAMPressure on the prices of dynamic random access memory (DRAM) will be limited because of demand for smartphones in the fourth quarter of this year.

That’s according to Trendforce which warns, however, that this is a temporary situation.

Avril Wu, an executive analyst at Trendforce, said that better smartphone shipments will drive demand for mobile DRAM. That means the decline of its average sales price will be within five percent during the fourth quarter.

But Wu said that the new year will show quarterly price declines of between six to eight percent as demand falls and supply increases

The next generation of smartphones will use a type of mobile memory called LPDDR4 – and only Samsung is able to manufacture in bulk right now.

Other big manufacturers including SK Hynix and Micron will be up to speed by the end of next year.

Glut forces memory makers to slow investment

Samsung DRAMOne of the leading manufacturers of DRAM has said it won’t upgrade its fabrication facilities in 2016.

SK Hynix had created a state of the art fabrication plant in Icheon, Korea, but will slow down investment.

The reason it gave was an uncertain business outlook but analysts have reported that there will be oversupply of DRAM memory chips well into next year.

Samsung is also believed to have put the brakes on memory production – the oversupply combines with the strong US dollar to mean that demand remains weak.

Samsung is ahead of the DRAM largest three manufacturers which include SK Hynix and US memory company Micron.

Samsung is currently working on a so-called three dimensional memory chip and it’s believed the other two leading manufacturers are some way off from competing with it.

Microsoft blamed for falling RAM prices

Samsung DRAMSoftware giant Microsoft giving Windows 10 away for free is being blamed for the slump in RAM prices.

You can pick up a DDR3 module for an average $18.50 per 4GB and prices appear to be headed downwards.

Many DRAM makers are blaming Microsoft. Normally when a new operating system is released, it normally drives a big upsurge in new system buys and upgrades. But Windows 10, like every operating system release since Windows 7 has not needed new hardware. Vole released it for free so people just installed it on their existing machines.

DRAMexchange’s Avril Wu said that notebook shipments in the third quarter fell short of what is expected for a traditional peak season mainly because Windows 10 with its free upgrade plan negatively impacted replaced sales of notebooks to some extent rather than driving the demand for these products.

That would be fine if was just Windows-based systems that haven’t been selling as well. Smartphones and server shipments are predicted to tumble over the next year too.

This will mean more price cuts which will make it difficult for anyone to make much cash from making RAM.

SK Hynix, Micron and Samsung are hoping that the move to 18nm standards sooner will give them some margins to play with.