Samsung likely to regain top spot in global chip market

Samsung Electronics is expected to regain the top spot in the global semiconductor market by revenue this year, outpacing its archrival Intel for the first time in three years.

According to estimates collected by market tracker FnGuide on Wednesday, the Korean tech giant is estimated to post 95.13 trillion won ($80.18 billion) in chip sales this year, up 30.6 percent from last year.

The record figure is compared to Intel’s sales estimates of $75.5 billion, down 1 percent from a year ago.

The upbeat outlook for Samsung comes as the world’s largest memory chip maker dissipated concerns over slowing demand from the PC market, while expectations are being raised for future demand for memory chips used in cloud data centers, electric cars and the metaverse.

In the so-called “super cycle” years of 2017 and 2018, Samsung topped global chip sales amid surging demand and high prices. But in 2019 and 2020, when demand for memory chips slowed, it had to give up the lead to Intel, the top maker of processor chips.

In August this year, Morgan Stanley warned in a report that “winter is coming” in the memory sector, saying demand for tech products during pandemic years could slow as countries were preparing for a return to normal.

But the report failed to predict the outlook for data center growth, 5G, the metaverse and other key trends that have offered a big demand boost for Samsung chips, beyond the pandemic.

Analysts projected an extension of the uptrend next year, citing the beginning of a boom cycle for memory chips from the latter half of next year.

“Memory chips continue to see strong demand from servers, while the demand from the PC market is slowing but better than expected,” said Park Sung-soon, an analyst at Cape Investment and Securities.

Lee Jae-yoon, an analyst at Yuanta Investment and Securities, echoed the view, saying “From the second quarter next year, a high-demand season for tech products, inventories will start to decline, driving up demand for memory chips.”

Their consensus for Samsung’s revenue next year was 112.1 trillion won, an 18 percent jump from this year’s estimates. Samsung is becoming the first chip maker in the world to see its sales exceeding the 100 trillion won mark. 

In its third-quarter earnings conference call in October, Intel said it expected at least $74 billion in revenue in 2022, marginally ahead of consensus estimates of $73 billion, signaling lower margins for the years to come due to its next-generation processor chips that are less profitable in the early stages.

While consolidating its leadership in memory chips, Samsung is expected to ramp up efforts to secure a bigger presence in making more advanced logic chips. Currently, non-memory chips make up about 20 percent of its total sales.

Under the Vision 2030 unveiled in August, Samsung aims to become the leader in the logic chip market by 2030, hinting at huge investments to beef up its foundry business and acquire smaller rivals.

By Lee Ji-yoon (jylee@heraldcorp.com)