Taiwanese Foxcon (Hong Hwa Precision Industrial) group, well known for its Apple iPhone manufacturer, is now getting ready to enter the memory semiconductor business. Memory semiconductor so called `Chicken Game` (price collapse due to mass competition for not supporting each other) was recreated 10 years ago as China began to produce memory chips next year after reopening of memory semiconductor market in Taiwan and there is a concern that it is not.

Electronic City, Taiwan`s IT media, has reported on May 7 that it is expected to reorganize its company`s affiliated company to establish a "semiconductor group" and to establish two factories that produce 12-inch memory semiconductor wafers .

The corporation manufactures circuit board design, software, and memory semiconductors based on semiconductor wafer design and manufacturing, including semiconductor equipment maker Jinging Precision Co., CBT (private beta test) shoe shin and integrated circuit (IC). The Chinese Internet media Feng Phi Network quoted multiple industry sources as saying that Honghai will make a technology development team with an external scout despite Honghua has not commented on this. The industry expects to invest at least KRW 8 trillion to establish two 12-inch wafer factories.

Honghui`s strategy seems to be related to the Chinese government`s move to build a semiconductor. Honghai is a Taiwanese company. However, most of the Foxcon factories that produce and sell Apple subcontracts are located in China. The Chinese government, which has been stimulated by the investigation of ZTE and Huawei sanctions in the United States, is planned to launch a second semiconductor fund of CNY 300 billion (KRW 51.48 trillion) in the near future.

Meanwhile, the semiconductor industry is giving attention to the possibility of Taiwanese memory semiconductor resurgence, which had been battling with Korean companies in the past with Japan. Taiwanese manufacturers, which started producing DRAM in the late 1980s, were aggressively expanding DRAM production since 2005, resulting in a market share of 18% after Korea`s No. 1 shipments in 2007. But, aggressive production expansion in Taiwan has led to profitability deterioration and business withdrawal, as well as DRAM companies such as Germany and Japan. Now, some Taiwanese companies such as Nanya and Winbond have a share of just over 3% in the memory semiconductor market.

The demand for memory has increased over the past two years, and Taiwan has had a chance to challenge the market again with the rise of IoT (Internet of Things) and AI (Artificial Intelligence). Samsung Electronics, SK Hynix along with Micron, which have survived the chicken game, have achieved an OP margin of 50% thanks to the rapid growth of D-RAM. Taiwanese semiconductor manufacturers seem to have determined that they can regain their former glory when combined with recent market conditions, China`s strong capital and own technology.

The related industry is concerned that the situation of chicken games may happen again in the case of the Taiwanese market reconsider and China`s full-scale production of semiconductors overlap. China Tsinghua Universe Group is expected to start the operation of the 3D NAND flash plant in Wuhan from 2016 at the end of next year and Fujian Jinhua Semiconductor will invest CNY 37 billion (about KRW 6 trillion) in September next year or 20 NANO or 30 NANO to start mass production of DRAM. Changmu Memory is also under process to release 32-stage NAND flash products in the first half of 2019.

An industry specialist pointed out, "Pursuit of the memory market will be faster once Taiwan`s technology is added to Chinese capital. There is a pressing need to develop next-generation semiconductors.”

By Park Jung Il comja77@


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