1) Samsung aims to stay "one step ahead" as an ecosystem leader in the mobile memory market by securing technology leadership and establishing de facto standards through continuous innovation.
2) The company seeks to exploit breakthrough memory technologies like V-NAND to boost demand and drive the next phase of growth.
3) Samsung is also working to extend its core competencies in areas like organization, open innovation, system knowledge, supply chain management, and quality to better deliver customized solutions and strengthen partnerships.
Samsung Analyst Day 2013: Memory Dong-Soo Jun Memory Business
1. The Conspirators
• Make sure your device uses Samsung Memory
Battery
Brutus
Fiona
Freeze
Loading Ball
Larry
2.
3. Disclaimer
The materials in this report include forward-looking statements which can generally be identified by phrases such as
Samsung Electronics (SEC) or its management "believes," "expects," "anticipates," "foresees," "forecasts," "estimates" or
other words or phrases of similar implications. Similarly, such statements that describe the company's business strategy,
outlook, objectives, plans, intentions or goals are also forward-looking statements. All such statements are subject to
certain risks and uncertainties that could cause actual results to differ materially from those in the presentation files
above.
For us, particular uncertainties which could adversely or positively affect our future results include:
· The behavior of financial markets including fluctuations in exchange rates, interest rates and commodity prices
· Strategic actions including dispositions and acquisitions
· Unanticipated dramatic developments in our major businesses including CE (Consumer Electronics),
IM (IT & Mobile communications), DS (Device Solutions)
· Numerous other matters at the national and international levels which could affect our future results
These uncertainties may cause our actual results to be materially different from those expressed in this report.
4. 1. Paradigm Shift
- Transition from PC’s to Mobile
2. Strategic Direction
- Stay “One Step Ahead” as Ecosystem Leader
- Exploit Breakthroughs in Technology
- Extend Core Competencies
5.
6. Memory Market Evolution
PC
Mobile
Smartphone
W/W Memory rev.($B)
PC
41
Big Data
Tablet
Datacenter
Card
Enterprise
SSD
Mobile DRAM
(PC SSD)
NAND
PC DRAM
1985
1990
(Source: isuppli, Samsung)
1995
2000
2005
1/34
2010
2015
7. Product Cycle
• Business cycle accelerates in mobile era
PC CPU & OS
Lynnfield
Cedar
Win8
Pentium4
Pentium Pro
Annual product cycles
Major Upgrade (Ver.)
Major Upgrade (Ver.)
3-4 year product cycles
Win7
WinXP
Win98
Win95
‘96
‘04
‘08
‘12
2
iOS 1
DDR2
DDR3
3
4
ICS
Honeycomb
Gingerbread
Eclair
‘08
PC DRAM
DDR
iOS 7
6
5
v1.0
‘00
SDR
Mobile OS
‘12
Mobile DRAM
DDR4
MDDR LP2
LP3
Faster standardization,
development and enabling years
Changes every 4 years
every 2
2/34
LP4
8. Product Compatibility
• Interchangeable Customized
Memory Vendor
A
Memory Vendor
B
A
B
Non-interchangeable
= Complicated SCM*
Pin-to-pin compatible
= Simple SCM*
More difficult in managing
raw material and work-in-process
* SCM : Supply Chain Management
3/34
9. Value Chain
• The mobile value chain is more horizontal
- Value more evenly distributed amongst key players
PC: Vertical Ecosystem
CPU
OS
Memory
Set
Mobile: Horizontal Ecosystem
Rule setter
Bulk of value
Memory
Rule follower
Commodity
provider
De facto
standard
by leading
players
Mobile CPU
Shared Value
Mobile OS
More opportunities
for value capture
4/34
Handset
10. Selective Relationship
• Supply interruptions possible during memory shortages
PC Makers
Tier1
Handset Makers
Tier2,3
Tier1
Tier2,3
No alternative
under shortage
Alternative supply
under shortage
Spot market
Spot market
Memory
Danger of production haltVendors
under shortage
Memory Vendors
5/34
11. Pricing
• “Tapered Pricing” for visible and predictable memory supply
Volatile Pricing (PC DRAM)
Price
Tapered Pricing (Mobile DRAM)
Price↑ Density↓
Price
Maintain BOM
Price↑ Density↓
Increase BOM
Volatile
Predictable
Time
Time
Commodity product
Predictable
priceCustomized product
and
continued cost innovation required
6/34
12. Winner Takes All
• Design-in at each vendor, 1st mover takes all
Memory vendors’ share
for PC maker ‘A’
Memory vendors’ share
for handset maker ‘B’
Others
No.3
No.2
No.2
No.1
No.3
(~10%)
(40~50%)
No.1
(70~80%)
(20~30%)
Need to be a first mover,
Not just fast follower
7/34
13. Technology & Capex
• Technology complexity driving greater CapEx
Tech. complexity
20nm
x1.8
50nm
100nm
Turn
Around
Time
CapEx
x1.1
x1.0
x2.0
x1.5
Need to improve ROI
- Minimum input maximum output
8/34
14. Product Quality
• PC memory is modular, but Mobile memory is embedded
- Product quality becomes more important
Module type
Embedded type
$00 for DRAM module High risk of
only
$000 for entire board
RMA* cost and lost business
* Return Material Authorization
9/34
15. Memory Market
• Paradigm shift is reflected in memory market
100%
158%
78%
40
-23%
-58%
23
4 2
3
7 8
51%
7
9
13
38%
10%
-36%
-1%
35
-64%
32
26
73%
57%
27
-23%
27 %
-12%
39-25%
29
25
33
26
17
15
11
Memory market gets more stable
(Source: isuppli)
due to diminished players and PC DRAM portion
10/34
16. Paradigm Shift
• Radical change of business paradigm
Mobile era
PC era
Strategy
Mobile era
Stay ‘One Step Ahead’
Shorter lifetime
as an Ecosystem Leader
Shorter lifetimeLonger lifetime
Product
Customization Commodity
Characteristics
Only One
Number One
- De factoCustomization
standard
Only One
Make-to-order Make-to-stock
Biz
Tapered pricing
Volatile market pricing
Model
Winner takes all
2nd mover has opportunity
Scaling limitations
Continuous scaling
Technology
Lower ROI Manageable CapEx
Higher RMA cost
Reasonable quality
11/34
Exploit Technology
Make-to-order
Breakthroughs
Tapered pricing
- Sustainable memory
demand growth takes all
Winner
Scaling limitations
Lower ROI
- Organization, Open innovation,
Higher RMA cost
System knowledge, SCM, Quality
Extend Core Competencies
18. Solutions for One Step Ahead
• Green Memory
- Value maximizing solution for datacenters
5th Generation
DRAM
SSD
20nm class
DDR4
10nm class
PCIe SSD
12/34
19. Green Memory Benefits
• Combined benefits of Green Memories provide
up to 105% greater operational efficiency
5th Generation
105%↑
Concurrent
User support
62%↑
Green
Solution
Current
configuration
Green
Solution
Same CapEx
Same space
Green Memory solution
13/34
20. Creating Shared Value
• Creating $3 Billion value
100% Green
45TWh
3.1 Billion
Dollars
Reduction*
800M Trees
(Singapore Area x4.6)
Solar Heat
Power Station
(Area of Hawaii x2)
The World Population
can use handset
within 1.8 years
Thermoelectric power plant
7.7 units Reduction
* Assumes ’14 W/W Server & high-end storage change to 100% Green Memory
14/34
21. One Step Ahead
• Continue to secure price premium via tech leadership
Mobile DRAM Price
Price
Only 1 in LPDDR3
Competition
Only 1 in LPDDR4
LPDDR4
LPDDR3
Premium
Premium
LPDDR2
Time
15/34
22. One Step Ahead
• Continue to secure price premium via tech leadership
High Density Mobile DRAM
Value
3GB
Samsung
2GB
Competition
World’s 1st
3GB
4Gb
Premium
2GB
World’s 1st
Premium
6Gb
Premium
6Gb x 4ea =3GB
4Gb x 6ea = 3GB
Competitor
16/34
Chipset validation complete
Handset evaluation finished
Mass production ready
Time
23. De facto Standard
• Cultivate de facto standard via ecosystem leadership
Mobile DRAM
De facto
standard
Memory
De facto
standard
Mobile CPU
Open
standard
by leading
players
Mobile OS
20nm class
4Gb LPDDR3
LPDDR3
Wide IO
LPDDR2
NAND Storage Solution
De facto
standard
Handset
Open
standard
eMMC 4.5
20nm class
4Gb LPDDR3
eMMC 5.0
UFS*
*Universal Flash Storage
17/34
24. Enabling Tech for One Step Ahead
• World’s first 3-bit NAND flash SSD
- Comparable performance at a value price
Overcome Trade-off
Higher
Performance
with superior solution
technology
840
(‘12)
840 EVO (‘13)
“I’m continually amazed
by Samsung's rise to power
in the SSD space.“ - Anandtech 1-bit
NAND
2-bit
3-bit
Lower
Cost
“The performance increase
is profound. Writes shoot up,
while the read results shoot up
- Tom's Hardware as well.”
18/34
26. Technology Paradigm Shift
• Memory process technology no longer lithography dependent
V-NAND
Technology
New Structure
?
Litho-dependent Scale-down = Higher density
Lower cost
krF
Better performance
Breakthrough
ArF
Tech. Limit?
Immersion
Litho contribution to CapEx
: Planar 45% V-NAND 15%
EUV?
19/34
27. Value Proposition of V-NAND
High Endurance
High Performance
Low Power Consumption
x10
x2
40% less
Program/Erase cycle
Planar
V-NAND
(2-bit)
Write speed
Planar
V-NAND
(2-bit)
power consumption
Planar
Shipping to datacenter customers
and receiving positive feedback
20/34
V-NAND
(2-bit)
28. V-NAND in Enterprise SSD
• V-NAND will change the server storage industry
Enterprise SSD bit shipments
V-NAND
Planar
2013
2014
2015
21/34
2016
2017
29. Multi-bit V-Solution
• V-NAND can be the most cost effective solution
Samsung’s
Multi-Bit Solution
Technology
V-NAND
Premium Quality
2-bit 3-bit
…
SSD Price
50%↓
Multi-bit V-Solution
Most Cost Competitive Solution
Current
22/34
V-NAND
(Multi-bit)
30. Creating new demand with V-NAND
• V-NAND will boost NAND demand
NAND bit Shipment
In mass production in Korea
and to be expanded to Xi’an, China
next year
Mobile
PC SSD
Enterprise SSD
V-NAND
Premium
Application
Planar
2013
2014
2015
23/34
2016
2017
31. How to Sustain DRAM Growth?
• Leading technologies will be applied to mobile first
as necessitated by increased scale
volume at node x
Cost
Specialty
+ Cost
Adder
Cost
Majority
Mobile
Majority
EDP
Mobile
EDP
Development timing
EDP-centric develop.
: Mobile Cost > EDP
Economy of Scale, EDP < Mobile ↑
Cost,
EDP > Mobile ↓
Development timing
* EDP : Electronic Data Processing
24/34
32. Continuous DRAM Technology Drive
• Three-pronged approach to sub 20nm breakthrough
3D TSV-based
Process Tech.
*Through-Silicon Vias
Breakthrough
30nm
: high density solution
Chip #1
#2
#3
#4
TSV-based
DRAM module
Solution DRAM
: Error management algorithm
: Server-class memory sub-system
New Memory
20nm
Limit?
: MRAM, ReRAM,
PRAM, etc…
Sub-20nm?
25/34
PRAM
34. What to Do
• To extend core competencies…
Organization
More customer and market-oriented
Reinforcing solution engineers
Core
Competencies
Capabilities
System knowledge
Competitive SCM, Quality
Collaboration
Open innovation
26/34
35. Re-align Organization
• Establish application/market-oriented organization
Cross-functional Virtual community
Application
Dimension
Functional
Dimension
System Engineering
Mobile
PC/
Tablet
Data
center
Chip Design
Package Design
27/34
36. Excellent Quality
• Samsung’s Server DRAM, Top-notch quality
Low Server DRAM fraction defective
Statistical methodology, Big data mining
Root-cause finding through cross-functional collaboration
x10 lower
defective rate
[ppm]
Top-notch quality
Leverage for Time
competitive mobile DRAM
28/34
37. Improve SCM
• Right product, time and place through improved SCM
- Transformation into manufacturing service provider
Inbound SCM
Outbound SCM
Increased Complexity
Differentiated, Dedicated
Raw
materials
Memory
Customer
A
A
“Samsung is truly differentiating
… obviously providing
B
more detail than even foundries
B
… proactive approach to improve C
C
the level of service of which is already great ”
29/34
38. Memorylink.samsung.com
• Smart online service & support
Information
Smartphone trend
Service Portal
Customize
Smart architecture
design tool
Customer
Recommend
Alignment with
memory solution
Memorylink.samsung.com
Sample Request
Sample order
and feedback
30/34
39. Global R&D Network
• Improve solution development capability
Israel
Xi’an, China
Flash
Management S/W
San Jose, USA
Storage S/W
S/W Architecture
Research &
Enterprise SSD S/W
Bangalore, India
New Tech. Sensing
& Product Enabling
Mobile S/W
Expanding Global R&D Personnel
700
0
2004
500
2013
31/34
2015
40. More Values via Open Innovation
• System, Solution and Software to unlock value
M&A
System Knowledge
- Nvelo (SSD S/W), etc.
Identify opportunities
Equity Investment
- Storage system start-ups
Solution Engineering
Create opportunities
Overseas R&D Center
- Tech. sensing, Product enabling
Software Capability
Maximize opportunities
Academia Collaboration
- Memory system architecture
32/34
41. Summary
• To align with the paradigm shift…
Strategy
Stay ‘One Step Ahead’
as an Ecosystem Leader
- De facto standard
Paradigm
Shift
Exploit Technology
Breakthroughs
- Sustainable memory demand growth
Extend Core Competencies
- Organization, Open innovation,
System knowledge, SCM, Quality
33/34