April 30, 1998 in Social Responsibility News

Samsung Electronics Produces World's First 256M DRAM

SEOUL, Korea - April, 30, 1998 - Samsung Electronics Co., Ltd., has become the world's first to produce the 256M DRAM, a device that is forecast to have a major impact on the 21st century DRAM market. Samsung Electronics has begun production 2-3 years before industry watchers had predicted, and the company has proven that the device can be mass produced from 8" wafers rather than having to invest in 12" wafer fabrication lines. Samsung Electronics' move is expected to send a shock wave through the DRAM market.
In April, Samsung Electronics shipped samples of its second-generation 256M DRAM to seven of the world's largest PC makers, including IBM, Hewlett-Packard, Compaq, Intel and Sun Microsystems. Samsung Electronics will have the technology to commence mass production by early 1999 and will be in the lead to challenge a US$58 billion annual DRAM market by 2001.

Samsung Electronics has applied intricate, ultra-precision 0.18 ( : 1/1,000mm) processing technology to produce its 256M DRAM. As such, the company estimates that it has at least a one-year lead over other semiconductor producers. Even Intel is not expected to begin using this technology to produce its next-generation "Merced" CPU until the end of 1999. Also Japanese chipmakers, meanwhile, are seen to have to first invest in 12" wafer lines before they can apply the 0.18 processing to make the 256M DRAM.

Some industry analysts have suggested that Korean chipmakers would have problems staying in the market, since the IMF bailout of the Korean economy has made it very difficult for them to raise funds for new facilities. Samsung Electronics has been able to silence those skeptics completely by using existing production facilities(8" wafers) and applying 0.18 processing technology to produce the 256M DRAM.

Importantly, Samsung Electronics' new 256M DRAM is designed to be the same size (1.016cm by 2.032cm) as the existing 64M DRAM. Therefore any computer system that is currently using 64M or 128M DRAMs can also be installed with the new 256M DRAM and sold without any modification. This means that the competitiveness of the new device will be high and will accelerate the industry's changing over from the 64M DRAM to the 256M DRAM.

At 167MHz, the processing speed of Samsung Electronics' 256M DRAM is also the world's fastest; it is even faster than Intel's PC-100, the next-generation PC standard. Each module can hold a total of eight 256M DRAMs on both sides, so a single slot can expand the memory up to 1-gigabyte. Power consumption of the new 256M DRAM is just 70mA, 30% less than the current 128M DRAMs available.

A single thumbnail-sized 256M DRAM chip can store the equivalent of two thousands newspaper pages of data. It is well suited for use in desktop PCs, workstations and high-end PCs. The annual market for the 256M DRAM is expected to soar from US$500 million in 1999 to US$3 billion in 2000 and then to at least US$9.4 billion by 2001.

The world DRAM market will increase 1% in 1998 (US$21 billion) from 1997 (US$20.7 billion). However, it is expected to recover starting next year (US$26.9 billion) and, bolstered by the introduction of the 256M DRAM, the market is set to explode to US$58 billion by 2001. Specifications for Samsung Electronics' 256M DRAM

Category Details Remarks Capacity 256-megabit synchronous DRAM Max. operating speed 167MHz @3.3V, 143MHz @ 2.5 V Operating voltage 3.3V 0.3V, 2.5V 0.2V Design rule 0.18 Package type 400 mil by 875 mil 1.016* 2.032cm Power consumption 70mA (70% of that for the 128M SDRAM) Applications Supercomputers, main frame computers, servers, workstations, high-end PCs Overseas pending patents 49 for design
65 for processes Total of 114 Domestic pending patents 256 for design
334 for processes Total of 590 Memory capacity 2,000 newspaper pages
100 still pictures
4 hours of audio recording
Data Explanation

By going into production of the 256M DRAM one to two years earlier than expected, Samsung Electronics has accelerated the cycle of generation change. A supply glut of the 16M DRAM and then the 64M DRAM has caused memory chip prices to drop steadily and has dampened the market outlook. Samsung Electronics move is expected to send a shock wave through the industry.

Until now, chipmakers have seen "technology + investment" as essential factors for success. With the accelerated change over to the next-generation 256M DRAM, technology will emerge as the most important factor. As a result, companies lacking the essential technology will more quickly be forced out of the market.

Importantly, Samsung Electronics has become the world's first to make the change from 64M DRAM production to 256M DRAM production without having to invest in new facilities. The IMF bailout of Korea has made it very difficult for Korean companies to raise huge sums of money to invest in new 12" wafer fabrication facilities. Therefore, foreign analysts have suggested that domestic chipmakers would be facing a crisis, but Samsung Electronics has proved them wrong.

Samsung Electronics is applying industry-leading 0.18-micron processing technology and suing existing 64M DRAM facilities to produce its new device, solving the major stumbling block to full-scale acceptance of the next-generation chip: price.

Applying this 0.18-micron technology to current mass production processes, Samsung Electronics can also produce up to the 5th-generation 64M DRAM, greatly boosting competitiveness of these chips as well.

In spite of an overall shrinking world market due to falling 16M DRAM and 64M DRAM prices, Samsung Electronics has managed to increase its share, from 18% in 1996 to 18.8% in 1997. Samsung Electronics expects to continue gaining market share. With early introduction of the 256M DRAM, Samsung Electronics is also well positioned to take advantage of and expected market upturn.

Importantly, Samsung Electronics has applied for a total of 590 domestic and foreign patents (256 for design, 334 for processes) related to the development and production of the 256M SDRAM. This means that the company will own virtually all the basic and mass production technology that is related to this device.

DRAM Market Outlook

'97 '98 '99 '00 '01 Growth rate $20.7 bil/font> $20.9 bil/font> $26.8 bil/font> $38 bil/font> $57.9 bil/font> 19.6%/yr

Source: International Data Corp. March 1998

256MDRAM Price Forecast

'97M '98 '99 '00 '01 256M DRAM -- -- $0.5 bil/font> $3 bil/font> $9.4 bil/font> Source: International Data Corp. March 1998 256M DRAM Unit Price Forecast '98 '99 '00 '01 $496 $239 $128 $55

Source: Data Quest November 1997

Impact of Semiconductor Industry on Korean Economy

Semiconductor Share of Exports

Total Korean exports Chip exports Share of total '95 performance $128.8 bil/font> $22.1 bil/font> 18.0% '96 performance $130.2 bil/font> $17.8 bil/font> 13.7% '97 performance $136.7 bil/font> $17.5 bil/font> 12.8% '98 performance $152 bil/font> $19.3 bil/font> 12.7%

*Figures include assembly operation
Source: KSIA

Added Values of Semiconductor Industry

The projected unit price for 256M DRAM is $496 in 1998. The cost of ten 256M DRAMs is about $5,000, the same as a subcompact (1500cc displacement) car. Between 750 and 1,000 256M DRAMs can be carried inside of a brief case. The values of these chips would be between $372,000 and $496,000. This total would be equivalent to the export cost for 13 to 17 of Korea's top-of-the-line automobiles.

Samsung Electronics Co., Ltd., a US $13 billion flagship company of Korean-based the Samsung Group, is a world leader in electronics, with operations in more than 60 countries.

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