Samsung Mobile, the leader in Android based SmartPhones continues to ride high differentiation options despite device exhaustion. Despite market concerns of commoditization / standardization (drastic margin erosion) of the high-end smartphone segment amid saturation, Samsung is confident that it can sustain high-end leadership with leading-edge in-house components (unbreakable flexible display, advanced mobile AP along with mobile memory solution).
Samsung believes economies of scale will work for cost leadership even in the mid- to low-end segment. We expect Samsung will monetize fast smartphone growth, leveraging on its well-established distribution channel in its existing feature phone business and strong brand power in high-end smartphones.
Samsung SemiConductors & Storage Memory for Mobiles
Samsung also expects more sustainable favorable memory industry dynamics given disciplined supply growth amid a consolidated structure. Samsung informed us today it had started commercial production of its V-NAND (3D NAND) products, which are intended to complement its portfolio of 20nm- and 10nm-class planar NAND products. We expect initial production of V-NAND in 2H13 to primarily serve sampling purposes, and continue to expect a bigger ramp in 2014, as Samsung’s new China fab enters production. Samsung noted its V-NAND utilizes the company’s proprietary vertical cell structure based on 3D Charge Trap Flash technology with vertical interconnects to link the 3D array. According to Samsung, V-NAND would be 2x-to-10x more reliable than 10nm-class NAND, while delivering 2x the write performance. We think such attributes could enable V-NAND to be successfully used in Enterprise SSDs as well.
Given increasing memory industry capital intensity (decelerating technology migration/chip shrinkage effect), we expect Samsung’s recent memory CAPEX increase will not disrupt industry.