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New chips, flat screens to set Samsung's future

Samsung is poised to develop a range of new memory chips and ever thinner LCD screens to keep its lead as Asia's technology powerhouse over the next decade.

business Updated: Aug 26, 2005 18:47 IST
Jennifer Tan (Reuters)
Jennifer Tan (Reuters)

Samsung Electronics Co Ltd is poised to develop a range of new memory chips and ever thinner LCD screens to keep its lead as Asia's technology powerhouse over the next decade.

Samsung, the largest maker of memory chips and liquid crystal display (LCD) screens, is likely to bet on developing next-generation magnetic RAM and ferroelectrics RAM chips and organic light-emitting diode (OLED) display technology.

Unlike dynamic random access memory (DRAM), magnetic RAM chips keep their stored data after the power is switched off and provide faster computing speeds, while ferroelectrics RAM chips have faster data processing speeds than flash memory and need less power.

Both technologies are expected to be used in devices ranging from smart cards to high-end mobile handsets.

"There's a constant search for the perfect memory chip - one that retains data after the power is switched off, consumes less power, with very fast processing speeds. Samsung will probably be betting on that in the future," said Peter Yu, an analyst with BNP Paribas.

Rival Hynix Semiconductor Inc and US-based Micron Technology Inc rank second and third in DRAM market share after Samsung.

Huge R&D spending

A Samsung spokeswoman said the company was targeting research and development (R&D) spending of 5.4 trillion won this year, up from 2004's 4.8 trillion won. The figure accounts for 9 percent of Samsung's expected 2005 sales.

"Samsung will continuously reinforce its core competencies to focus on high-capacity memories, next-generation semiconductors, displays and digital TVs," she added.

Intel Corp, the world's largest computer chip maker, is targeting R&D spending of $5.2 billion this year or 13 percent of revenues, up from $4.8 billion in 2004. Smaller rival Micron's R&D spending was just $754 million in its 2004 fiscal year.

Eyes on OLED

Samsung is likely to focus on OLED, which is still in the early phases of development, analysts said. Unlike traditional LCDs, the most common type of flat screens used in televisions and computer monitors, OLED displays are paper-thin, more versatile and use less power.

"Since Samsung has invested so much in LCD technology, they would be the one to make the next-generation displays," said Yu.

Samsung competes with second-ranked domestic rival LG Philips LCD Co Ltd and third-ranked Taiwan's AU Optronics Corp in LCD production. LG Philips spends about 3 percent of its 8 trillion won annual revenue on R&D.

So-called passive OLED displays, like small screens on cellphones and car audio equipment, are most common.

Active displays offer higher resolution and higher information content, ideal for videos and graphics on larger screens like laptops and desktop computers. But their life cycles are short and the technology is too unreliable to be commercialised on a large scale yet.

Analysts estimate the cost of making OLEDs could be up to 20 to 50 percent cheaper than LCDs.

"In the next three to four years, it's still quite predictable - Samsung is still the lowest-cost producer of memory chips and LCDs and would be able to sustain its current handset business," said Deutsche Bank analyst DJ Yook.

"But the new growth drivers for Samsung five to 10 years from now are quite uncertain. They would probably concentrate (research and development efforts) on their existing strengths in semiconductors and displays," he added.

First Published: Aug 26, 2005 18:47 IST