Samsung and SK Hynix increase R&D investment to maintain their leading position

Yonhap News Agency reported that global memory chip giants Samsung and SK hynix set a record high in research and development spending last year, hoping to maintain their leading position and develop emerging technologies amid the global chip market downturn.

South Korea's Samsung Electronics said on the 2nd that its research and development spending last year increased 11% from a year ago to 18.7 trillion won (16.5 billion U.S. dollars), equivalent to 7.7% of annual sales, the highest level since 2003.

Samsung pointed out in the report that the mass production of epoch-making smartphone flash memory chips, dynamic random access memory (DRAM) and solid-state drives (SSD) using advanced processes is the result of its heavy investment in research and development.

Last year, Samsung said it had obtained 2,055 patents in South Korea and 6,062 in the United States to protect the company's intellectual property rights in semiconductor technology.

SK Hynix, the world's second-largest memory manufacturer, said that its R&D investment increased by 16.4% year-on-year to 2.9 trillion won last year, which means that it has been above 2 trillion won for three consecutive years. SK Hynix also said that its R&D work focuses on DRAM and NAND solutions as well as new products and emerging technologies to maintain growth momentum and find new business opportunities. SK Hynix's report shows that the company's semiconductor technology has obtained 12,786 patents as of December last year.

South Korea's tech giants are increasing investment to maintain their market leadership and distance themselves from China's emerging chipmakers, while developing new technologies to expand into markets beyond semiconductors as global chip prices fall.

Reuse storage counter-cyclically?

While Samsung is increasing its storage investment, China is also vigorously developing the storage industry. Due to the particularity of storage itself, the domestic industry should strictly prevent the recurrence of the "counter-cyclical" phenomenon.

In the discussion of CICC Research, in addition to summarizing its efforts, secondary entrepreneurial spirit and extensive layout, Samsung's "suicidal counter-cyclical investment" was praised:

When investing in DRAM memory, the price of DRAM fell from $4 per piece in early 1984 to 30 cents per piece in 1985. At this time, Samsung's production cost was $1.3 per piece. By the end of 1986, Samsung Semiconductor had accumulated losses of $300 million and its equity capital was completely lost. The DRAM market was sluggish, American companies such as Intel withdrew from the market, and Japanese companies reduced their investment scale and production capacity. However, Samsung invested counter-cyclically, continued to expand production capacity, and developed larger capacity DRAM. In 1987, the industry took a turn. The US government initiated an anti-dumping lawsuit against Japanese semiconductor companies. The US government and Japanese companies reached an automatic export restriction agreement, and Japanese companies reduced exports to the United States. Soon DRAM prices rebounded and Samsung began to make a profit.

When investing in LCD panels, Samsung also adopted a counter-cyclical investment method. 1995-1996 was the second recession cycle of the panel industry. Samsung adopted a counter-cyclical investment method and built its first 3rd generation line in 1996, catching up with the production capacity of Japanese companies. After the outbreak of the Asian financial crisis in 1997, Samsung once again adopted a counter-cyclical investment method and invested in expanding LCD panel production lines. Samsung built a 3.5-generation line (600×720mm glass substrate) at the end of 1998, leading Japanese companies that only had 3rd generation lines at the time.

Even if Samsung has raised such a banner, and storage prices are indeed falling now, how should domestic companies view this situation?

Recently, Yu Yingtao, the deputy president of Tsinghua Unigroup, the investment company of Yangtze Memory Technologies, a leading domestic storage player, responded to this statement: "I dare not say there is a conspiracy theory, and I don't want to talk about conspiracy theories. The market is the law of the jungle. The pursuers will always be suppressed by the leaders. This is a rule. When you don't have it, they sell it at a high price. When the big mobile phone was first released in the 1980s, it cost 30,000 yuan. Now the mobile phone is 1,000 yuan. This is a manifestation of social progress. You say whether they deliberately suppress it, I dare not say, at least due to the emergence of Yangtze Memory Technologies' independent innovation chips, the price of the entire storage chip has been greatly reduced. This is social progress."