Samsung, the biggest memory chipmaker in the world, admitted that it would buy DRAM chips from its rival SK Hynix in order to satisfy the demand generated by its booming smartphone sales.
One reason for Samsung’s amazing success is the fact that Samsung, unlike many of its competitors, makes most of the components that go inside its flagship devices. When you buy an HTC phone or an iPhone, a part of the money you pay goes to the makers of the chips, display, battery, and other components that make up that device.
However, when you purchase a say, Galaxy S4, most of that money goes to Samsung Electronics or its sister companies. This means more profit, which means more marketing and R&D, which means more sales. It’s a virtuous circle for Samsung, which rakes in more money and also has an easier time manufacturing and securing components.
But not even Samsung can make everything in-house, especially when talking about popular devices like the Galaxy S4 or the Note series. Case in point, the Korean company is now forced to buy DRAM chips from its local rival SK Hynix, Bloomberg reported. It is speculated that the decision by Samsung, which makes half of all DRAM chips in the world, is a result of the intense demand for its smartphones. In other words, Samsung makes so many devices that its RAM factories can’t keep up, so the technology giant has to buy it from rivals.
[quote qtext=”There’s a possibility that demand for mobile chips may increase faster than had been anticipated so Samsung is trying to brace for it.” qperson=”Byun Han Joon, Analyst” qsource=” ” qposition=”right”]
How is this significant to the average customer? For one, it’s another proof that Samsung is on a tear. Next, the fact that the biggest DRAM maker in the world needs to call in a rival could herald a potential shortage in the industry.
DRAM is very much commoditized, so it’s unlikely we’ll see manufacturing blockages, like it happened last year when TSMC wasn’t able to cope with the demand for 28 nanometers processors. Smaller manufacturers, though, could be put on the waiting list, and a price hike would put even more pressure on an already brutal industry where only two companies (Samsung and Apple) make real money.
We’ll stop short from saying that a RAM shortage caused the delay of the availability of the Galaxy S4. But the fact that Samsung sees the need to secure more components is likely related to the “explosive demand” for the new flagship.