In the pressurized mobile memory market, there is as much cooperation as conflict between some majors, and the main players are keen not to add patent ligitation to their challenges. The latest in a string of cross-licensing deals between the Korean and Japanese memory firms, which are defending their market against newer Chinese providers, sees Samsung and SK Hynix agreeing to share patents. The ultimate aim appears to be a strong combined IPR base between vendors in the two countries, which will protect them from lawsuits and present a united front to rivals.
SK Hynix, the chipmaking arm of the Korean group which also owns SK Telecom, has signed a deal with Samsung after three years of negotiations. The two firms have become increasingly, if reluctantly close ‘ though Samsung makes 50% of the world’s mobile DRAMs, it has still reportedly been forced to buy extra supplies from its compatriot this year, to meet demand for its smartphones and tablets, as world memory supplies continue to be pressurized.
On the patent front, Samsung signed a similar cross-licensing deal with Micron in 2010, while SK Hynix has a comparable deal with Japan’s Toshiba, dating back to 2007.
As the demand from Samsung’s own mobile division, as well as outside customers, rises, it will sometimes need to keep rivals friendly, since Apple and others will be fighting to be head of the line for their chips too (SK Hynix gets over 9% of its revenue from Apple).
‘Not only DRAM chips, but all memory chips for mobile devices show signs of shortages,’ Kim Sung In, an analyst at Kiwoom Securities, told Bloomberg earlier this year. Samsung’s biggest chip customer is itself and things will only get out of hand with the approach of the third quarter, typically the strongest time of year.’
The rise in demand for mobile DRAMs is one factor in the shortages, while the other is a reduction in suppliers and capacity. The slump in PC memory chips led to the main DRAM rivals to Samsung – SK Hynix (25% market share), Micron, Nanya Technology, Powerchip and others ‘ losing a combined $21bn in 2008-2012. Micron bought Japanese player Elpida out of bankruptcy protection, while several Taiwanese vendors exited the space.