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Samsung Electronics now No. 2 in chip sales

Jan 16,2020
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Samsung Electronics is no longer the world’s No. 1 semiconductor maker, with Intel taking the lead in 2019.

The change in the rankings is largely due to the downturn in the memory market. Samsung Electronics dominates in this business as the largest seller of both DRAM and NAND flash memory. Santa Clara, California-based Intel is stronger in the manufacturing of central processing units (CPUs).

According to data from Gartner, global semiconductor revenue declined 11.9 percent in 2019.

For Samsung Electronics, revenue declined 29.1 percent during the same period. Intel experienced a 0.7 percent decline.

As a result, their rankings flipped, with the No. 2 becoming No. 1 and the No. 1 becoming No. 2.

The world’s second-largest memory chip maker, also from Korea, is SK Hynix. The company’s revenues last year fell at 38 percent. This was the biggest on-year decline of the companies in the top 10. But despite the fall, SK Hynix maintained its No. 3 ranking.

According to Gartner Research Vice President Andrew Norwood, revenue in the memory market declined 31.5 percent in 2019. Memory sales were 26.7 percent of all semiconductor sales that year.

In the memory market, DRAM sales fell the most.

“DRAM revenue declined 37.5% percent due to an oversupply that started at the end of 2018 and lasted throughout 2019. The oversupply was caused by a sudden fall in demand from the hyper-scale market,” Norwood said.

“Excessive inventory at DRAM vendors in the second half of 2019 pushed pricing lower and resulted in an average selling price decline of 47.4 percent in 2019.”

Samsung Electronics is very exposed to the market. Memory chip sales were 82 percent of total revenue in 2019. That year, the company operating profit fell 52.9 percent.

The share prices of Samsung Electronics and SK Hynix have been rising in recent weeks on the anticipation of a stronger memory chip market.

In 2018, when the markets for these products were strong, both companies reported record results.

“In 2020, we expect to see semiconductor market revenue increase,” especially in the memory sector, Norwood said.

BY SONG JYOUNG-SON [song.kyoungson@joongang.co.kr]