Making Good Memory(s) in Volatile Times
The semiconductor is a viciously competitive market. It is capital intensive with little margins. To survive in the semiconductor world, one truly must be on the top of its game. According to a recent article, Samsung will be able to use its competitive advantages to leverage market shares.
Market analysts have seen a slowing trend in microchip demand, and future forecasts are looking bleak. Companies like Intel, Toshiba, Hynix and Micron all stand to lose a large percent of their operating income, upwards of 65% in this quarter. Intel has even been forced to cut 12,000 jobs to cushion the impact. How is Samsung surviving this brutal slowdown? Samsung has positioned its competitive advantages in technology. Samsung’s investment in technology has given them a first mover’s advantage. With this first mover’s advantage Samsung has also moved up the learning curve, and in this time of hardship that knowledge will payoff greatly. Samsung is years ahead of its competitors in manufacturing, allowing them to decrease the size of their chips, permitting more chips per wafer. Also the smaller chips take up less volume and consume less energy, which has differentiated their product and increased their profit margins. These advantages alone will help bolster Samsung’s strategic position, yet, its greatest advantage is vertical integration.
Not only is Samsung an industry leader in the semiconductor business, it also happens to be an industry leader in the smart phone business as well. Samsung generates its own demand for microchips, and with its vertical integration, they can capitalize on both ends of the spectrum. In reality, Samsung may lose some profits, but the market shares it stands to make easily outweigh the cost. In these volatile times Samsung looks forward to making good memory.