Samsung Analyst Day 2013: Memory Dong-Soo Jun Memory Business


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Samsung Analyst Day 2013: Memory Dong-Soo Jun Memory Business

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Samsung Analyst Day 2013: Memory Dong-Soo Jun Memory Business

  1. 1. The Conspirators • Make sure your device uses Samsung Memory Battery Brutus Fiona Freeze Loading Ball Larry
  2. 2. 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.
  3. 3. 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
  4. 4. 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
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. Strategic Direction - Stay “One Step Ahead” as Eco-system Leader
  16. 16. 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
  17. 17. 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
  18. 18. 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
  19. 19. 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
  20. 20. 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
  21. 21. 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
  22. 22. 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
  23. 23. Strategic Direction - Exploit Technology Breakthroughs
  24. 24. 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
  25. 25. 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)
  26. 26. 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
  27. 27. 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)
  28. 28. 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
  29. 29. 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
  30. 30. 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
  31. 31. Strategic Direction - Extend Core Competencies
  32. 32. 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
  33. 33. 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
  34. 34. 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
  35. 35. 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
  36. 36. • Smart online service & support Information Smartphone trend Service Portal Customize Smart architecture design tool Customer Recommend Alignment with memory solution Sample Request Sample order and feedback 30/34
  37. 37. 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
  38. 38. 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
  39. 39. 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
  40. 40. Transformation in progress… Unpredictable & Fluctuating Biz Stable & Steady Growth 34/34
  41. 41. Thank You