It is rumored that the second phase of investment in Samsung's Xi'an semiconductor plant may be postponed due to poor memory market conditions

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China Electronics News, Electronic Information Industry Network

Samsung Electronics originally planned to invest in the second phase of its semiconductor plant in Xi'an, China in 2016, but it was reported recently that the plan is currently on hold. The industry estimates that 2016 will see the worst supply and demand imbalance in the memory industry in seven years, and with Toshiba , SanDisk and Intel adding NAND Flash plants, Samsung is beginning to worry about the vicious competition caused by the sharp increase in supply.

Currently, Samsung Electronics Xi'an Factory only uses one-fifth of the total hinterland ( about 340,000 square meters ) , and with the current equipment, it has reached the maximum capacity, so the South Korean industry originally believed that Samsung would carry out the second phase of investment in the remaining hinterland in 2016. Digital Times recently quoted industry sources as saying that Samsung's second phase investment plan in the Xi'an semiconductor factory may be postponed to after 2017 .

The Xi'an plant, which was first put into operation in 2014 , is the core production base of Samsung's 3D V-NAND . Relevant sources said that the Xi'an plant, which was put into operation less than two years ago, has already approached the level of 100,000 wafers per month based on wafer input , and its output has greatly exceeded the original estimate of 60,000 to 70,000 wafers.

Samsung's decision not to implement the second phase of investment is likely related to the large-scale expansion of NAND Flash production lines by Toshiba and Cintiq . Toshiba and Cintiq previously jointly invested 500 billion yen ( about 4.3 billion U.S. dollars ) to establish a 3D NAND Flash production plant, which is expected to start formal operation in 2017 .

In addition, Intel and Micron have also invested in 3D NAND Flash mass production. If even Samsung enters the second phase of investment in its Xi'an plant, the NAND Flash market may fall into an irreversible oversupply competition.

South Korean semiconductor industry insiders further explained that from Samsung's perspective, the biggest concern would be the entry of Toshiba, which has the most secure mass production structure, and the division of the market. Although Intel and Micron do not pose a big threat at present, they may also eat into the market demand for the new generation of data centers in China.

Samsung's strategy in 2016 is to minimize investment in semiconductor equipment and plans to win with the next generation of DRAM starting in 2017. Samsung estimates that DRAM , which is currently in the worst market situation , may reach its lowest point in the second half of the year and start to recover after 2017 , so it is expected that only the first phase of the Pyeongtaek plant will be launched to produce the most advanced DRAM during this period .

As for NAND Flash , the company will enhance its dominance in the high-end market by improving the generation of 3D V-NAND , and also plans to strengthen the price competitiveness of its products. An insider of Samsung said that although it is unable to announce the investment plan for semiconductor equipment, Samsung will flexibly use various countermeasures to respond to changes in the market situation.

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