Samsung could be about to overtake Intel as the world's biggest chip maker, knocking the US semiconductor giant off of the perch it has occupied since 1993, when it usurped Japan's NEC as the world's top chip maker.
According to a report from analyst group IC Insights, Samsung's chip sales could top Intel's in the second quarter of this year, weighing in at $14.6bn compared to Intel's $14.4bn.
This is largely due to the rapid adoption of mobile devices, which has fueled demand for DRAM and NAND flash memory. These markets have been growing at double-digit rates compared to the PC market, which has been declining for the best part of a decade, taking demand for Intel's desktop CPUs down with it.
The demand for DRAM and NAND chips is such that Samsung is able to charge more for them, bumping up its revenues and margins in a business that Intel got out of in the mid-1980s because it had become too commoditised and competitive.
"Samsung's big increase in sales has been driven by an amazing rise in DRAM and NAND flash average selling prices," IC Insights argued.
"IC Insights expects that the tremendous gains in DRAM and NAND flash pricing experienced through 2016 and into the first quarter of 2017 will begin to cool in the second half of the year, but there remains solid upside potential to IC Insights' current forecast of 39 per cent growth for the 2017 DRAM market and 25 per cent growth in the NAND flash market..
As Samsung revealed during its latest earnings report, it's not only seeing an increase in demand for DRAM and NAND, but also for its 14nm mobile processors, which saw profits from the division climb 40 per cent year-on-year.
"Over the past 24 years, some companies have narrowed the sales gap between themselves and Intel, but never have they surpassed the MPU giant," IC Insights concludes.
"If memory prices don't tank in the second half of this year, it's quite possible that Samsung could displace Intel in full-year semiconductor sales results as well. Presently, both companies are headed for about $60.0 billion in 2017 semiconductor sales."
Intel exited the memory business in 1985 due to the aggressive price competition from Japanese rivals, including NEC, Toshiba, Hitachi, Fujitsu and Mitsubishi.
Instead, it focused its resources - in a market it had pioneered since the 1970s - on CPUs, a decision that helped it to become the world's biggest chip-maker in 1993.
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