Mix is changing as Korean chip firms get flashy

Korea’s memory chip market is undergoing a generational shift with NAND-type flash memory chips fast superseding dynamic random access memory chips in sales importance. In a meeting with reporters last Friday, Chu Woo-sik, investor relations chief of Samsung Electronics Co., reportedly forecast that NAND chips will make up almost 40 percent of all memory chip sales revenue in the fourth quarter. If this happens, NAND chips would nearly overtake the presently dominant dynamic random access memory, or DRAM, chips for the first time. The market share of NAND chips has jumped more than 10 percentage points since last year, while DRAM’s share is projected to make up less than half, compared to 60 percent last year. DRAM chips’ fast processing speed makes them ideal for use in personal computers and workstations, but they lose any unsaved data as soon as the computer is turned off. By contrast, NAND flash memory chips retain massive amounts of such data. The demand for the high-capacity NAND chips has been exploding lately, bolstered by strong demand for digital gadgets such as portable digital music players, digital cameras, voice recorders and cell phones. The rising demand for NAND-type flash memory chips is also being felt at Hynix Semiconductor, the nation’s second-largest manufacturer of DRAM chips. While NAND flash memory chips made up less than 10 percent of the company’s sales revenue last year, they accounted for around 30 percent in the third quarter this year. Bolstered by the popularity of flash memory chips, Hynix recorded $212 million in revenue for such chips last year, ranking fifth in the world -- quite an achievement for a company that joined the flash memory market less than a year ago. In the second quarter this year, Hynix snagged a 10 percent share of the global flash memory market, making it the world’s third-largest manufacturer behind Toshiba and first-placed Samsung. With competition in the NAND chip market getting fiercer, prices are on a downward spiral, declining about 30 to 40 percent per year. However, the drop has been engineered by local manufacturers such as Samsung, which aim to expand the market. “Even if prices drop, profits will continue to rise now that the production lines for our latest chip technologies are fully operational and the productivity of multi-level cell chips has been enhanced to save up to 40 percent in production costs,” a Samsung spokesman said. by Seo Ji-eun