After COVID-19, Semiconductor and DP Supercycle Arrives, Beginning the Tech Hegemony War

[Post-Corona, Global Corporate Survival Strategies] 1. The Answer Lies in Semiconductor Display Super-Gap
Significant Improvement Expected in Semiconductor Market Including DRAM, NAND Flash, Foundry This Year
Samsung Electronics and SK Hynix Preparing for Supercycle
Display Demand Also Greatly Improved Since COVID-19

[Asia Economy Reporters Changhwan Lee, Dongwoo Lee] 'Resilience'.

Global companies, caught off guard by virus attacks, are focusing on this keyword most in the new year. While last year’s sudden halt due to the novel coronavirus disease (COVID-19) was a common denominator among global companies, the new year, with vaccine supply underway, may see different outcomes depending on each company.

Just as the global economy is showing a 'K'-shaped recovery pattern with the gradual resumption of economic activities, companies’ fortunes can quickly diverge depending on how they respond. Companies are preparing rapid responses such as developing innovative technologies that surpass competitors and launching new products that captivate consumers.

Additionally, as a new approach to respond to the post-COVID-19 era, interest in Environmental, Social, and Governance (ESG) factors is growing. COVID-19 has heightened people's awareness of safe and healthy living and triggered various changes in perception, including responses to global environmental disasters. We explore corporate future survival strategies in preparation for the post-COVID era.

Vice Chairman Lee Jae-yong of Samsung Electronics inspecting the construction site of Pyeongtaek Plant 3 on the 4th.

Why Vice Chairman Lee Jae-yong Chose a Semiconductor Factory as His First Management Schedule for Two Consecutive Years

Korean companies are already moving swiftly to prepare for changes in the business environment after COVID-19. Korea’s representative industries, semiconductors and displays, are no exception.

This is why Samsung Electronics Vice Chairman Lee Jae-yong visited a semiconductor factory as his first management activity of the new year for the second consecutive year. On the 4th, he attended the introduction ceremony of foundry production equipment at Samsung Electronics’ Pyeongtaek 2 Plant (P2) in Pyeongtaek, Gyeonggi Province.

Samsung Electronics’ Pyeongtaek 2 Plant is the world’s largest semiconductor factory, equivalent in size to 16 soccer fields. It began full-scale operation in mid-last year and is an advanced integrated production line producing the latest DRAM, NAND flash, and ultra-fine foundry products. Last year, it produced memory semiconductors, and this year, it is starting full-scale foundry production by bringing in extreme ultraviolet (EUV) equipment on this day.

Vice Chairman Lee views semiconductors as a core business that will lead Samsung’s future even in the post-COVID era. In particular, the system semiconductor business, including foundry, is a key future growth engine that Lee personally oversees. In April 2019, he announced the 'Semiconductor Vision 2030,' planning to invest 133 trillion won by 2030 to become the world’s number one in system semiconductors. To achieve this, investment and employment are being significantly expanded.

Intense Technological Competition Among Samsung, SK Hynix, and Others

Competition among global companies to dominate the semiconductor market, which has entered a supercycle (long-term boom), is intensifying. Market research firm IDC expects global semiconductor demand this year to increase by 19% for DRAM and 34% for NAND flash compared to last year.

Semiconductor exports are already showing significant improvement. According to the Ministry of Trade, Industry and Energy, Korea’s semiconductor exports last month reached $9.46 billion, a 30% increase year-on-year. This is the highest level in two years and four months since August 2018.

Korea’s semiconductor exports have increased for six consecutive months through last month. The government analyzed that the resumption of data center investments by global IT companies has sustained memory semiconductor demand, and competition in the Chinese smartphone market has maintained mobile semiconductor demand, resulting in strong semiconductor exports.

System semiconductor exports are also increasing noticeably. Last month, system semiconductor exports reached $2.99 billion, a 45% surge year-on-year. The industry believes Samsung Electronics contributes more than half of Korea’s system semiconductor exports, and this share is expected to grow with business expansion. Financial investment sectors forecast Samsung Electronics’ system semiconductor sales, which were around 15 trillion won in 2018, to surpass 20 trillion won this year.

Technological dominance competition among semiconductor companies has also heated up. Major global semiconductor companies such as Samsung Electronics and SK Hynix will begin full-scale mass production of 4th generation 10-nanometer-class (1a) DDR5 DRAM in the second half of this year.

Both companies have completed product development and are coordinating supply schedules for server and CPU products with major customers like Intel and AMD.

DDR5 features a data transfer speed of up to 6400 megabits per second (Mbps), about twice as fast as DDR4’s 3200 Mbps. Power consumption is 1.1 volts (V), approximately 9% lower than DDR4, and maximum capacity has increased about fourfold.

Following DRAM, the NAND flash market is also in fierce next-generation technology competition. Since oversupply is expected until the second quarter of this year, the industry is focusing on developing next-generation high-stack 3D NAND technology to maximize price competitiveness. NAND increases storage capacity by stacking storage units called cells vertically, enabling production of high-capacity products at lower prices to secure profitability.

Display Industry Benefits from Untact Demand... Building Infrastructure for Korea’s Technological Super-Gap

The shift to a contactless (untact) society triggered by COVID-19 has led to increased demand in the display market. Contrary to initial expectations of a prolonged economic downturn early last year, the expansion of remote work and online classes benefited the display industry. In particular, the full-scale home-stay era increased new and replacement demand for essential untact products such as TVs, laptops, and PCs.

According to the financial investment sector, display demand area in 2020 is estimated at a total of 240 square kilometers, about 4% growth compared to 2019. This year, total display demand area is expected to grow by 5.8% year-on-year to approximately 254 square kilometers.

TV sales, a major segment of the display industry, are expected to perform steadily in the overall display market. Omdia estimated that global TV sales last year slightly increased to 223.83 million units from 222.91 million units the previous year, and demand is expected to continue this year in premium and lifestyle TV product categories.

More than 40% of global smartphone products are expected to feature OLED panels this year, which is favorable for Korean companies leading the small- and medium-sized OLED market. Samsung Display shipped a record 124.35 million OLED panels for smartphones in the fourth quarter last year, accounting for 80% of the total market and continuing its upward trend.

The industry expects that diversification of smartphone form factors, such as rollable phones, will emerge as a key driver of the display market’s supercycle in the future.

Experts point out that for Korea to lead the display technological super-gap, factors such as technology development, securing price competitiveness, and infrastructure establishment are essential.

Professor Moon Daegyu of the Department of Display New Materials at Soonchunhyang University said, "Developing game-changing products using next-generation display technologies such as Quantum Dot (QD), Micro LED, and flexible displays is essential," adding, "A virtuous cycle structure must be created that generates various application products and leads to production processes that reduce manufacturing costs."

This content was produced with the assistance of AI translation services.