Samsung is already considered by many to be the biggest maker of mobile devices and television sets in the world. Well, the South Korean company wants to be king of processors, too.
Samsung is reportedly planning to shell out an amount of $15 billion in order to open a new semiconductor factory in South Korea by the year 2017. Most people may not be familiar with the costing dynamics of the chip manufacturing industry, but suffice it to say that $15 billion is more than a lot, considering that most other chip makers only spend less than $10 billion for each new processor plant.
Intel co-founder Gordon Moore postulated in 1965 that processors improve at an exponential rate every couple of years. Samsung certainly agrees with the crux of Moore's deft observation, and the South Korean company is ready to spend big money on making chips. It is already the world's largest vendor of memory chips, and in terms of manufacturing processors, is second only to Intel. This means that even if your mobile device does not have a Samsung brand name, it probably has a Samsung-made component inside there somewhere.
As processors become more powerful, they also become a lot smaller in physical size. Thus, chip makers now are trying to make the smallest chips, and the one who manufactures them the fastest may have a better chance of success. The mobile industry is a notoriously cutthroat business -- finishing first is always the goal, otherwise troubles ensue.
Samsung knows this better than anyone. In the last few quarters, the company has had dwindling sales and declining profit margins, especially in its smartphone business. But in the field of processors, Samsung may be on to something good.
Sure, other chip makers like Qualcomm and Nvidia may still be the leading brands, but Samsung is now catching up, attracting new customers as well as regaining lost ones. Take Apple for instance -- the iPhone manufacturer purchases more processors than any other company (except maybe for Samsung), and it used to buy loads from Samsung. But their relationship fell through due to ongoing legal battles over smartphone patents and designs. But now, industry watchers are saying that Samsung may have won Apple back as a customer.
And Samsung is now catching up with Intel in making chips. The South Korean company has already begun making 14 nanometers, currently the most advanced technology in chips. And it is doing it way ahead of Taiwan Semiconductor Manufacturing Co. (TSMC). Samsung may not have managed to beat Intel in producing 14 nanometers, but Samsung is only lagging by six months, not by a few years as what usually happened before. Intel, however, has been making its chips for personal computers, while Samsung is making its chips for smartphones, which is undoubtedly the more promising and faster growing market.
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