Korea Should Watch Out for a Japanese IT Resurgence

Japanese semiconductor maker Elpida Memory announced it has developed the world's first DRAM made with 25-nanometer manufacturing technology and will begin mass production in July, beating rival Samsung Electronics in the race to miniaturize microchips. Samsung, the world’s largest memory chipmaker, currently produces DRAMs using 35-nanometer technology and plans to roll out chips via 20-nanometer technology around the end of this year.

Korea has not been beaten in the race to pack more circuits onto a uniform chip since Samsung rolled out the world's first DRAM using 64-nanometer technology in 1992. Samsung has until now been confident that it was at least six months ahead of its Japanese, U.S., Taiwanese and German rivals. But Elpida's coup has shattered that confidence.

Elpida is going through some tough times financially, posting an operating loss of 6 billion yen during the first quarter, so its operating profit declined 7 percent. In contrast, Samsung's operating profit rate stands at 18 percent. Moreover, Elpida does not have the capacity yet to produce even 30-nanometer DRAMs, and it remains to be seen whether it will be able to roll out memory chips through the 25-nanometer process.

But Japan's technological prowess as demonstrated by Elpida's bold announcement should not be underestimated. Japanese memory chipmakers controlled 80 percent of the global market in the 1980s. That share has dropped to the 10 percent range, and the only remaining player is Elpida, which combined the memory divisions of NEC and Hitachi. Yet Japanese manufacturers still rank at the top when it comes to chip circuit design and precision micro-machining technology. Samsung's technological lead could crumble if Elpida joins hands with Taiwanese chipmakers, which boast superb production technology.

Samsung failed to anticipate the smartphone era and is still suffering from the iPhone shock. And now it has received a blow to its mainstay DRAM business. The mighty can fall very fast: IBM lost the race in the desktop PC market while it fixated on large computers, while Microsoft ceded its dominance in the IT industry to Google as it focused all its resources on upgrading its existing software programs. After spending 20 years at the top, Samsung is plagued by bureaucratic practice, and the creativity and out-of-the-box thinking that were the sources of its innovative edge have dulled. It should keep a close eye on the impact of Elpida's resurgence in DRAM technology.

englishnews@chosun.com / May 04, 2011 13:05 KST