Although Samsung Electronics has a leading position in many areas of the global electronics manufacturing, competitors threaten its leading position. This is a concern not only for Samsung, but also for the society of the Republic of Korea. Samsung remains the largest donor to the South Korean economy, and the loss of market positions will directly affect the state of many affairs in the country.

Samsung CEO Lee Jae Young on a field trip at ASML (second from left). Image source: businesskorea.co.kr

According to the South Korean media, Samsung is closing the gap with other leaders in the production of RAM. At the end of the fourth quarter of 2020, Samsung had a 41% share of the DRAM market. It was followed by SK hynix (29,3%) and Micron Technology (24,3%). But the real threat to Samsung may be China, which spares no expense in strengthening the national production of semiconductors and, in particular, RAM.

Europe also made its move, announcing plans to capture 20% of world semiconductor production by the end of the decade. For this, European companies have a backlog, but whether there is enough “gunpowder” is still a question. Nevertheless, Samsung will have to take into account the EU’s attempt to revive the production of chips, and it is unlikely that Europeans will go to this with market methods. Protectionism and subsidies – Samsung has yet to face this.

Also, South Korean sources note that Samsung is lagging behind the main competitor in the contract manufacturing market – TSMC. But this is not only Samsung’s problem, but also a weakness in the field of factoryless chip development in the Republic of Korea. There are very few world-renowned developers in this country, and Samsung can grow only together with customers. This applies to both the design and manufacture of chips, as well as packaging and testing. In this, Samsung is very, very far behind TSMC.

According to TrendForce analysts, in the first quarter of 2021, TSMC held 56% in the contract manufacturing market for semiconductors, and Samsung – 18%. One of the secrets of TSMC’s success is an unaffordable investment in production. For example, TSMC’s annual capital expenditures have been 300% higher than Samsung’s for many years. This year, for example, a Taiwanese company plans to invest at least $ 28 billion to install 3nm production lines in Taiwan, just one example.

The situation is similar with the procurement of the most advanced scanners in the EUV range. At the end of 2020, Samsung owned 25 EUV scanners, and TSMC about 50.Since 2018, TSMC bought over 60% of the EUV scanners released from ASML, and the rest was distributed among Samsung, Intel, Micron, SK Hynix and others. This is an example of an attempt to detach TSMC from the rest and Samsung. The South Korean manufacturer is trying to mitigate this by ordering an additional 20 more EUV scanners.

Finally, Samsung’s SoC and LSI (LSI) business is harmed by the fact that the company independently develops such components, for example, for smartphones. Therefore, the same Qualcomm and NVIDIA, for reasons of intellectual property protection, in some cases prefer to work with TSMC. But Samsung’s own production of SoC Exynos is being pressed both from above (by Qualcomm) and from below (by MediaTek).

Another tricky situation in the field of image sensors. Here Samsung has to fight the Japanese Sony. The latter owns 45,1% of this market, while Samsung holds 19,8%. Samsung has a lot of interesting innovations in the form of 108 megapixel and 0,7 micron pixels, but Sony is Sony. The credibility earned for decades and high quality firmly bind customers to it. Samsung cannot rest on its laurels. Works are endless.