2. General Outlook -- Vice Chairman
A fun tidbit on slide 3 -- Samsung wants to make $400B USD by 2020. That's more than double Samsung's 2012 haul of 201T Won ($189.6B USD). Slide 5 shows Samsung expects OLED and SSD to be the fastest high-tech growth places from 2012-2017. Samsung also expects modest growth in smartphones and "smart TVs", slowing by 2017.
Slide 12 suggests that Samsung views 4K and foldable displays as "the next big thing" in smartphones. In semiconductor fabrication, it believes that new structures -- i.e. whatever comes after the FinFET -- could help solve the riddle of poor performance and high leakage at 7-14 nm nodes. Maybe we'll see that "Christmas tree" transistor after all?
A particularly interesting side note is found on Samsung's IP slide, which hints at an upcoming holographic display.
Samsung thinks there'll be ~25 billion connected devices by 2020. Back to patents, Samsung now holds 30,641 patents in the U.S. and over 100k worldwide -- granted, a lot of those are encumbered by obligatory licensing.
Samsung's CEO JK Shin emphasized a key landmark -- 100M units of Galaxy S and Note smartphones sold worldwide (this number was hit in January 2013). Apple hit the 100M unit mark in early 2011, after roughly four and a half years on the smartphone market. The original Galaxy S was made available in mid 2010, so Samsung has achieved Apple's magic number in three years. Hitting 100M units in only two-thirds of the time it took Apple to reach that mark is a big win, but reminds us that iOS still leads Samsung's Galaxy line in lifetime unit sales.
Samsung moved 17.6 million tablets in H1 2013 (more than Samsung's entire 2012 sales), and expects 40 million tablets to be sold in 2013. As of Oct. 2012, Apple had sold 100 million iPads. In other words, Samsung's catching up with rapid tablet sales growth, but it still has a long way to go in terms of installed devices base.
Market research firm TNA says Samsung is now the top smartphone branded, Interbrand calls it the 9th most valuable brand, up from 19th in 2010. Samsung is pushing for strong tablet and smartphone growth in developing nations. It's focused on advanced LTE and flexible displays (the latter of which some debate the merits of).
Samsung is standing behind its premise that wearables will become a major future business segment. It points out an interesting fact -- it actually had a watch phone back in 1999. So while Seiko (Holdings Corp. (TYO:8050) introduced smartwatches in the 1980s, Samsung should be recognized as a legitimate pioneer in this field as well, even if that device didn't make much of a splash in the Americas.
The company is borrowing a page from Apple's playbook expanding its branded "Samsung Experience" stores this year globally. The stores first opened in 2011.
Above Samsung breaks down what it views as key differentiators in its mobile devices.
This presentation had a lot of predictable stuff, but a bit of meat as well.
A neat fact from IMS Research on slide 6:
It's no wonder why Samsung's appliances aren't a major driver of growth. We truly live in an age of disposable mobile electronics that was once the stuff of science fiction.
On page 12 Samsung predictions an explosion in the UHD (ultra high definition) display segment, e.g. 4K displays.
Samsung expects 1.2 million UHD unit sales in 2013, rising to 5.6 million units in 2014 and 17.1 million units by 2016. Interestingly Samsung calls > 60-inch flat panel displays as its fastest growing segment, and it emphasizes pickup in "emerging" market regions. The company predicts 1.9 million units in this segment sold in developing nations in 2013 and 3.6 million in 2016.
Samsung says it will sell 73 million Smart TVs this year and 107 million by 2016. By 2016 Samsung says "emerging" markets will account for 70 percent of Smart TV sales. At CES last year, Samsung emphasized trying to push Smart TV product with swappable processor modules, a move that will extend panel life for consumers, while giving Samsung viable ongoing business. This emphasis was absent from the display talk, though.
5. Memory Business
Dong-soo Jun, Samsung's memory business President, gave us a wide view of Samsung's current storage (nonvolatile memory) and DRAM (volatile memory) current business and plans.
The early slides emphasize what we already know -- computing is going mobile, OS releases are going to shorter cycles, and computer components are moving from interchangeable to tightly integrated.
Samsung says going to 20 nm took twice the capital (R&D, fab construction) investment as going to 100 nm a decade ago. It also took 80% longer to develop. Samsung points out that with tight integration DRAM/NAND failures become much more costly as you have to RMA (return to manufacturer) the entire device -- a dangerous trend.
Samsung is switching to a "tapered pricing" and "winner takes all" model for mobile memory sales. Tapering essentially is a way of flattening out volatile spot pricing, but it may require the entire industry to switch to this approach. Winner takes all means that Samsung won't reserve memory for multiple OEMs, but will allow the first (or best) bidder to buy as much of its total stock as it wants.
Samsung is prepping 6 Gigabit modules for the mobile DRAM market, an industry first. This will allow smaller 3 GB phone packages (4 chips, instead of 6), or even a 4.5 GB or 6 GB tablet/smartphone packages.
Samsung brags of "Green Fifth Generation Memory" -- 20 nm class (e.g. possibly 22, 28 nm) DDR4 for data centers and 10 nm class (e.g. possibly 14, 19 nm) SSDs. Samsung predicts that in 1.8 years these technologies will migrate from the data center to mobile space. It says this will save 45 TWh and $3.1B USD in power consumption annually.
Expect LPDDR3 4 Gigabit chips at the 20 nm node to start popping up shortly in Samsung products, according to its slide. It says this is a non-standardized development, which advances the slower move standard nodes, during interim releases. From a patent wars perspective, this could mean that if other OEMs adopt the tech, Samsung may be able to sue them without obligatory licensing (as it's not exactly part of a standards spec.). Samsung also cites AnandTech praise for its 840 Series SSDs, which were the first models to introduce 3-bit NAND flash cells (see slide 24).
Relying on vertical NAND (vNAND, also known as "3D memory") has reduced Samsung's reliance on process development by a factor of 3. Thus even as Samsung works on its next generation UV process to replace immersion lithography, it is eyeing vNAND to hold down the release cycles in the interim.
The deck also makes it clear that Samsung is exploring multiple next generation storage technologies, including resistive RAM (ReRAM), phase change memory (PRAM), and magnetic RAM (MRAM) and has not decided on one yet, given to all of these technologies being in their nascent stages and having serious tradeoffs.
Slide 39 gives a view of where Samsung's NAND and memory research and engineering centers are. Samsung is expanding its research in this vital area. It's based in South Korea, Israel, and America -- developed high-tech hubs -- and also has key facilities in India and China, the world's top two emerging markets.
6. Semiconductor outlook
Samsung's Dr. Namsung (Stephen) Woo presented a view of Samsung's semiconductor business. Samsung predicts that premium smartphone unit sales will only grow 9 percent next year, while mid-range and budget units will grow by 22 percent. This perhaps validates HTC Corp. (TPE:2498) apparent decision to step back from the high end market. On the tablet front you see a similar story with premium sales growing 25 percent and mid-to-low end models growing 58 percent (slide 4).
Samsung tells us to expect WQHD (2,560x1,440 pixel) smartphone displays to replace FHD (1920x1080) next year as the high end standard. And Samsung predicts UHD (aka 4K) (3,840x2,160) display availability in the mobile market in 2015. The question we must ask ourselves is "why"? Oh well, 4K displays in 4-to-5 inch phones may benefit those few genetic freaks with better than 20/20 vision.
After image stabilization (2009), face detection (2010), and wide dynamic range (e.g. the HDR+ features in Android 4.4 Kit Kat) firmware has played a key role in Samsung's camera efforts. Samsung is planning to increase sensor resolution from 13 MP in 2013 to 20 MP in 2015. Of course, Sony Corp. (TYO:6758) and Nokia Oyj. (HEX:NOK1V) already are using 20 MP+ sensors in many phones.
A key piece of data is found on slide 15 which clarifies Samsung's die shrink schedule on the system-on-a-chip side somewhat. Samsung next year will move from a high-K dielectric, metal gate (HK/MG) 2nd generation 28 nm process to a 20 nm first last-gate HK/MG process next year, with a 0.9 V threshold voltage (down from 1.0 V at 28 nm). Expect 14 nm to arrive possibly sometime in 2015 or 2016, which will be a major update, introducing Samsung's first FinFET based design (e.g. "3D transistors"). Samsung is also working on a second generation, 10 nm FinFET, according to its roadmap. That tiny 3D transistor will have a threshold voltage of 0.7 V.
Samsung is using back-side illumination (moving to a transparent metal layer over the photodiode to reduce reflection), gapless pixels, light guides, and deeper deposition to increase the sensitive and reduce noise in its photosensors for digital camera units.
Samsung is currently using 1.12 µm (micron) or 1.34 µm pixels [source, not in the slide], in 16 MP sensors for its smartphones. These small pixels absorb less light but there're more of them. Apple currently uses a sensor 1.5 µm pixel, 8 MP sensor in the iPhone [source], while Nokia uses a 41 MP, 1.12 µm pixel. HTC uses a 4 MP, 2.0 µm sensor. Generally the Lumia 1020 is cited as producing the "best" pictures, followed by the HTC One and iPhone 5S, followed by the Galaxy S4. Samsung's efforts seem to be falling a bit behind here; it's unclear how 20 MP sensors in 2014 will allow it to catch up camera-wise with its competitors.
Samsung, like Intel Corp. (INTC), is moving aggressively to embed DRAM in its Exynos systems-on-a-chip, connecting the processor and DRAM module via through-silicon-vias (TSVs).
Another very important note is Samsung's plan for 64-bit ARM CPUs. It reveals it plans to first release a 64-bit chip using optimized IP cores from ARM Holdings plc (LON:ARM) (i.e. the Cortex-A53/A57 cores), but is also working on a longer term plan to make its own 64-bit ARM cores based on the A64/ARMv8 instruction sets (also licensed from ARM).
Also interesting is Samsung's "Foundry 2.0" slides:
Samsung seems to be suggesting it will license its first-party ARM cores as possibly second-hand IP cores, which would be pretty interesting. Its "10 nm leadership" also appears to suggest it plans to at least beat GlobalFoundries and Taiwan Semiconductor Manufacturing Comp., Ltd. (TPE:2330) (TSMC) to this node -- and possibly Intel as well.
Intel will reach 10 nm (ostensibly) in 2016. Samsung deployed 45 nm in 2010, 32 nm in 2012 (with a new process), and 28 nm this year. Extrapolating, Samsung will likely release 14 nm in 2015 (as it is a new process) and 10 nm in 2016 (as it's just a die shrink). It appears Samsung may catch up with Intel by 2016 in process side, according to this more detailed account.
Of course that involves a lot of "IFs" as it assumes no delays -- and recall even the mighty Intel suffered delays moving to 14 nm -- and it already had production FinFETs. Samsung adding FinFETs and jumping to 14 nm may be targeting 2015, but it could easily slide to 2016, leaving Intel a little ahead once more.
7. The Future of Displays
Kinam Kim, Ph.D, Samsung Display CEO, gave a preview of what's going on in Samsung's display manufacturing unit.
Currently at $128B USD, Samsung Display earned 38 percent of that from mobile applications, up substantially from 2010 (17 percent). That smartphone leadership has helped Samsung score a 10 percent gain in profit in 2012 (YoY) versus a 5 percent decline in profit that the industry on average experienced. AMOLED is also displacing LCD, slowly, in Samsung's portfolio; this year it is expected to account for nearly half of displays sold.
Samsung says that in every major market segment its displays have at least a 30 percent stake in global devices sold to consumers. Notably, nearly half of all smartphones made have a Samsung-produced screen.
The key to Samsung's plans for flexible and foldable displays lies in thin film encapsulation (TFE) that builds on Samsung's AMOLED evaporation-based production method that debuted in 2007. Much like Apple, Samsung essentially bought this (TFE) technology, via the acquisition of Vitex Systems in Sept. 2010. For a flexible substrate compatible with evaporation processes, Samsung turned to Japanese chemical company Ube Industries, Ltd. (TYO:4208), whom it launched a joint venture (Samsung Ube Materials (SUM)) in Aug. 2011.
The first results only support modest static bends, but Samsung has working prototypes that are fully flexible and foldable, which it will look to bring to market within a few years. Samsung predicts that by 2015 12 percent of smartphones will be flexible and that by 2018 40 percent will be.
Samsung will be introducing a new oxide LCD manufacturing process, which it says will bump traditional TFT LCDs up to 250 ppi (pixels per inch) -- good enough for the mid-range.
Meanwhile it's planning to expand its flexible and rigid AMOLED production, which uses a low temperature polycrystalline silicon (LTPS) production process.