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.