Samsung Electronics Nears Full Operation of Xi'an Plant 2 in China... Expanding Local Engineer Recruitment

Completion of Phase 2 Expansion at Sian 2 Factory Nears Full Operation
Monthly Wafer Production Capacity Reaches 130,000... Combined with Factory 1, Total 250,000
Samsung Electronics Solidifies No.1 NAND Market Share with Technology and Production Strength

[Asia Economy Reporter Suyeon Woo] Samsung Electronics has completed the expansion of its Xi'an Plant 2 in China and has entered the final countdown to full-scale operation. Samsung Electronics plans to operate all lines at the Xi'an plant at full capacity from mid-year to solidify its dominant position in the NAND flash market, which is currently undergoing restructuring.

According to local industry sources on the 22nd, Samsung Electronics' semiconductor production subsidiary in Xi'an, China (SCS), is recently recruiting engineers for testing technology and packaging technology. The recruitment of test and packaging engineers, which correspond to the final stages of the semiconductor production process, is interpreted as a sign that full operation is imminent.

Earlier, Samsung Electronics decided on a massive investment of $15 billion in its only overseas memory semiconductor production base, the Xi'an plant in China. Following the first phase investment of $7 billion in August 2017, an additional $8 billion was invested in the second phase in 2019. The expanded production line from the first phase investment began shipping finished products as early as March last year, and the plant currently preparing for full operation is the production line from the second phase investment, expected to be fully operational by mid-year.

In May last year, even amid the COVID-19 pandemic, Samsung Electronics dispatched about 500 semiconductor personnel to the Xi'an plant through the corporate fast-track system and special permits. Around the same time, Samsung Electronics Vice Chairman Lee Jae-yong visited Xi'an Plant 2, toured the facility, and ordered the implementation of an uninterrupted operation plan, stating, "We must proactively prepare for massive changes." In March this year, local reports indicated that equipment installation for the second phase investment expansion line had begun.

Samsung Electronics' Xi'an plant operates as Plant 1 and Plant 2, and upon completion of the second phase investment expansion, Plant 2 will have a NAND flash production capacity of 130,000 wafers per month. Combined with Plant 1's production volume of 120,000 wafers per month, the total NAND flash production capacity will reach approximately 250,000 wafers per month. This corresponds to about half of Samsung Electronics' estimated NAND flash production volume last year in the industry.

In the global NAND flash market in the first quarter of this year, Samsung Electronics maintained its dominant position with a market share of 33.3%. According to Counterpoint Research, the market share in the first quarter was followed by Kioxia at 18.2%, WDC at 14.2%, SK Hynix at 12%, Micron at 11.4%, and Intel at 7.3%.

However, last year Micron threatened Samsung technologically by becoming the first in the world to develop 176-layer NAND, and SK Hynix is increasing expectations for market restructuring by investing over 10 trillion won to acquire Intel's NAND business unit. Samsung Electronics has already secured 8th generation V-NAND technology with over 200 layers and is responding with a strategy to maintain market leadership, aiming for 1,000-layer NAND in the future.

Song Jae-hyuk, Vice President and Head of Flash Development at Samsung Electronics, said, "Competition in the number of V-NAND layers is intensifying, but the core competitiveness lies in stacking as low as possible even with the same number of layers to reduce size," adding, "Samsung is confident that it will lead the market based on innovative technology even in the era of 1,000-layer V-NAND."