[Inside Chodong] Intensified Numbers Race in the Semiconductor Industry

[Asia Economy Reporter Sunmi Park] "When hiking, each person has a different pace. At some points, you may go a bit faster, and at others, slower. Everyone has their own tempo and strategy."

At a recent Q2 earnings conference call, SK Hynix's Head of Business, Noh Jong-won, used the metaphor of 'hiking' in response to an investment institution's question expressing concern over semiconductor competitors' continuous development of next-generation products. It was a roundabout way of saying that SK Hynix is also following a set pace and strategy in developing advanced products, so there is no need to feel anxious.

At the Q2 earnings announcement event where SK Hynix posted its best-ever results, Noh did not receive much encouragement such as "Well done" or "We expect you to do even better." Instead, he spent a lot of time explaining and clarifying the company's response to competitors' advanced product competition, concerns about semiconductor demand contraction, and the company's inventory and profitability enhancement strategies. This reflects the growing global economic uncertainties surrounding the semiconductor industry and the heightened survival competition among companies, as well as the sense of crisis over competitors adopting strategies to shorten tech nodes.

In fact, the memory semiconductor industry is closely watching the intense competition in NAND stacking, especially as U.S.-based Micron has become the first to start mass production of 232-layer NAND flash. Currently, the memory semiconductor market is led by Samsung Electronics with a 35.3% market share, followed by Japan's Kioxia (18.9%), SK Hynix (including Solidigm) at 18.0%, Western Digital (12.5%), and Micron (10.9%). The market mainly circulates 128-layer and 176-layer products, with leading companies competing to develop products with over 200 layers. Micron, previously outside the 'top 3,' has now completed development of 232-layer NAND and begun mass production.

SK Hynix, caught off guard in the highest-layer NAND competition, promptly announced the successful development of 238-layer NAND memory. It plans to start mass production of 238-layer 512Gb 4D NAND flash from the first half of next year. Separately, the company revealed a strategy to increase the production ratio of 176-layer products to about 70% this year, aiming to achieve industry-leading profitability and bit growth (shipment increase rate per bit). While prioritizing customer-friendly product development and lowering unit costs to enhance profitability over rushing to develop products with over 200 layers in Q1 and Q2, SK Hynix also expressed its determination not to fall behind competitors in the NAND stacking race.

The foundry (semiconductor contract manufacturing) industry has also ignited competition in ultra-fine processes. Right after Samsung Electronics announced the world's first 3-nanometer foundry mass production at the end of June, the U.S. and Japan announced plans to establish a joint next-generation semiconductor research center within the year, targeting 2-nanometer semiconductor mass production by 2025. Since industry leaders Taiwan's TSMC and Samsung Electronics are also aiming to commercialize 2-nanometer processes by 2025, the race to enter the 2-nanometer era first has become the foundry industry's hottest topic. With the competition for the 'first' ultra-fine process title already underway, there is an inevitable atmosphere to start mass production before yields improve to secure customers.

The intensified semiconductor competition atmosphere is directly linked to a numbers race for 'industry first' titles. Even a momentary hesitation can quickly spread the perception that a company is lagging behind in the accelerated advanced technology development race. This directly affects customer acquisition and market share changes. To keep pace with the accelerated technology development speed, the government must speed up support for the semiconductor industry. The semiconductor numbers race is progressing too fast and fiercely to simply applaud by looking at the big picture and direction of support.

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