Having aspired for years to balance its DRAM-heavy portfolio with logic ICs that would account for as much as 40% of revenue, Samsung Electronics Co. Ltd. last week earmarked $3.6 billion in R&D funding to carry out the plan.
The five-year plan is said to be aimed at lifting Samsung's System LSI business into the top five logic-IC suppliers and reducing the company's exposure to the volatile DRAM market.
A company spokesman confirmed the spending plan, but details were not readily available.
By itself, Samsung's System LSI unit would be considered a major semiconductor market presence. Published reports put System LSI revenue at $1.4 billion in 2001, almost a quarter of Samsung's total revenue.
A leading supplier of 8-bit microcontrollers, display ICs, SRAM, flash, and smartcard controllers, the division nevertheless has remained in the shadow of Samsung's massive DRAM business.
While this is not the first time Samsung has committed substantial resources to expanding its logic-chip business, analysts speculated that the Seoul, South Korea-based company has simply grown weary of the memory market's price instability.
One market watcher wondered how much longer Samsung and its main DRAM rival, Micron Technology Inc., can continue to do battle as memory manufacturers.
"I don't know how long a company like Samsung can afford to stay in DRAM and still be a significant player in the semiconductor market," said Brian Matas, an analyst at IC Insights Inc., Scottsdale, Ariz.
"I think the depth and duration of this DRAM downturn has taken a lot of fringe players away, and even some not-so-fringe players, and has put a lot of pressure on the leaders. It behooves them now to look at other avenues for revenue," Matas said.
Just as once-dominant Japanese DRAM makers have sought stability in system-on-chip and other noncommodity arenas, so eventually will Korean suppliers, Matas asserted.
Like its Japanese counterparts, Samsung has a wealth of manufacturing process technology and know-how that it can use to support its System LSI push, he said.