Samsung Electronics "Solid Semiconductor Technology Leadership... Pursuing M&A in AI, 5G, and Automotive" (Comprehensive)

[Asia Economy Reporter Su-yeon Woo] Samsung Electronics expressed confidence in maintaining its semiconductor technology gap. It dismissed concerns that competitors are narrowing the technology gap and announced plans to secure long-term growth engines through meaningful M&A within three years.

On the 29th, Samsung Electronics said in its Q2 conference call, "V-NAND competitiveness is not about the number of layers itself but about the timing and method of stacking efficiently," adding, "Securing technological competitiveness in terms of efficiency and cost is the point we are focusing on." It continued, "We are also working on securing cost competitiveness for DRAM, and DDR5 technology, which has some cost competitiveness concerns, will not be applied to all mass-produced products; the final adoption will be decided considering costs and other factors."

Samsung Electronics: "Firm Lead in Semiconductor Technology... Expanding V-NAND Lineup Beyond 200 Layers"

Last year, when US-based Micron succeeded in developing the world's first 176-layer NAND, concerns about Samsung Electronics' NAND technology arose. In response, Samsung Electronics plans to begin full-scale mass production of consumer SSD products using the industry's best etching technology-based double-stack 176-layer 7th generation V-NAND in the second half of the year.

Han Jin-man, Vice President of Samsung Electronics, said, "Up to 2022, the 176-layer 6th and 7th generations will be the focus, and the technology roadmap is planned up to 10 years ahead," adding, "For the double-stack 8th generation V-NAND with over 200 layers, which is expected to have absolute price competitiveness, we have already secured the operating chips and are preparing to expand the lineup."

In DRAM technology, Samsung plans to mass-produce 14nm DRAM with EUV (Extreme Ultraviolet) lithography equipment applied to five layers in the second half of the year. The industry has raised questions about cost reduction and production capacity expansion due to EUV adoption. Regarding this, Vice President Han said, "EUV is more important for maximizing synergy through ecosystem construction and know-how accumulation than simply purchasing and applying equipment for production," adding, "We will secure cost competitiveness through EUV adoption and, in the long term, secure leading-edge technology competitiveness."

In the foundry business, Samsung plans to maximize supply capacity by actively utilizing advanced processes such as the Pyeongtaek Foundry S5 line mass production products, 5nm 2nd generation, and 4nm 1st generation. The development of the next-generation 'GAA (Gate-All-Around)' technology, which Samsung decided to adopt abruptly, is progressing as planned, and major customers are currently designing products using the 3nm 1st generation process. Through this, Samsung plans to apply 3nm 1st generation process mass production in 2022 and aims for 3nm 2nd generation product mass production in 2023.

QD Display Full-Scale Mass Production in Q4... Monthly Production of 30,000 Units

Samsung Display's Quantum Dot (QD) display will enter full-scale mass production from the fourth quarter. Equipment installation began in the first quarter, and currently, through ramp-up (yield improvement), it has a production capacity of 30,000 units per month. Choi Kwon-young, Executive Director of Samsung Display, said, "We are currently preparing to respond to both TV and monitor products at the request of customers," adding, "We currently have a monthly capacity of 30,000 units, and future additional investments will be strategically decided based on customer and market responses."

Regarding the highly anticipated M&A plans, Samsung reiterated its plan to pursue meaningful M&A within three years to secure future growth breakthroughs. Seo Byung-hoon, Vice President of Samsung Electronics' Management Support Office, said, "Due to many internal and external uncertainties, it is difficult to specify the timing, but we view the possibility of realizing meaningful M&A within three years positively." He added, "If it helps the company's sustainable growth, we do not limit the business area or scale and are looking at fields that will become new growth engines such as AI, 5G, and automotive electronics."

Record Highest Sales in the First Half... Semiconductor Performance Recovers to Supercycle Level

Samsung Electronics announced Q2 sales of 63.67 trillion KRW and operating profit of 12.57 trillion KRW, up 20% and 54% respectively from the same period last year. Delivering an earnings surprise in Q2, the company also recorded the highest sales ever for the first half of the year. First-half sales reached 129.06 trillion KRW, setting a new record for the first half, and operating profit reached 21.9 trillion KRW, the highest level since the first half of 2018.

In particular, semiconductor division sales were 22.74 trillion KRW, and operating profit was 6.93 trillion KRW, increasing significantly by 24% and 27% respectively compared to the same period last year. The Q2 performance rose to the level of the second half of 2018, which was the end of the previous supercycle. The DP (Display Panel) and CE (Consumer Electronics) divisions also maintained a solid trend with operating profits in the trillion KRW range.

In the second half, semiconductors will continue to lead performance, while all business divisions including Display (DP), Consumer Electronics (CE), and IT & Mobile (IM) are expected to grow evenly, leading to forecasts that Samsung Electronics' annual consolidated operating profit will leap to around 50 trillion KRW. Samsung Electronics stated, "The component business market conditions are expected to be generally favorable in the second half, and we will focus on enhancing product technology leadership," adding, "The set division will also pursue stable profitability through premium leadership and lineup strengthening."