Analysts say Samsung DRAM expansion will crush Chinese rivals

Damned if you do damned if you don't. Samsung recently indicates plans to boost its DRAM production capacity, a move that will further bolster the company's position as the leading manufacturer of DRAM chips. The South Korean firm already owns over half of the DRAM market and its plan to double its capital expenditures from $11.3 billion to $26 billion could have a devastating impact on its smaller rivals.

Analysts from IC Insights predict Samsung's expansion spree means it will become even harder for Chinese startups to gain a foothold in the competitive DRAM or 3D NAND markets:

In the meantime, consolidation in the DRAM business has left three companies – Samsung, SK Hynix and Micron – with a combined 95 percent share of the world market. China, which buys about a fifth of the global DRAM supply, has funded the creation of domestic memory producers such as XMC to reduce dependence on imports and get a leg up in the semiconductor industry. China’s plan may be dashed.

“Samsung’s current spending spree is expected to just about kill any hopes that Chinese companies may have of becoming significant players in the 3D NAND flash or DRAM markets,” IC Insights said in a Nov. 15 report. “This year’s level of spending by Samsung just about guarantees that without some type of joint venture with a large existing memory suppler, new Chinese memory startups stand little chance of competing on the same level as today’s leading suppliers.”