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While future as a supplier is uncertain, Samsung looks to give itself an edge in process

Other than Intel Corp. (INTC), the company perhaps investing the most in chipmaking research and development is Samsung Electronics Comp., Ltd. (KSC:005930).  Perhaps that's because Samsung -- like Intel -- actually manufactures the chips it sells, a rarity in today's market.  And like Intel, Samsung is willing to spend extra to try to gain an edge over competitors who source to third-party chip fabricators.

Samsung announced, according to Reuters, that it will build a new chip line for 300 mm wafers built on 20 nm and 14 nm processes.  The cost is estimated to be $1.9B USD, a pretty big chunk of change from Samsung's large research budget.

A location for the new line has not been announced, but it's quite possible that it could be added on the company's Texas property, which currently produces the chips found in nearly all of the smartphones sold by the world's top two smartphone makers -- Samsung and Apple, Inc. (AAPL).

Samsung smartphone chip wafer
Samsung is investing billions to improve its chipmaking. [Image Source: BSN]

Gartner, Inc. (IT), a market research company, estimates that orders of smartphone chips will soar from $23B USD in 2011 to $59B USD by 2016.  Samsung looks poised to vie with Intel for dominance in this market, thanks to process advantages that third-party fabs with smaller budgets -- such as Taiwan Semiconductor Manufacturing Comp., Ltd. (TPE:2330) don't have.

Samsung also looks to continue to dominate the market for memory and storage chips.  The DRAM line -- perhaps the last profitable one in the world -- will look to add process updates to continue to accomodate the thirst for lower power designs.  Samsung is also building in China a new plant to produce bleeding edge NAND flash storage chips, which will cost 4-5T won ($3.4-$4.2B USD) to complete.

Timeframes for the new processor and NAND lines have not been announced.

Source: Reuters





"If you can find a PS3 anywhere in North America that's been on shelves for more than five minutes, I'll give you 1,200 bucks for it." -- SCEA President Jack Tretton



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