Samsung bets on storage devices as smartphone sales slow down

Samsung Electronics Co on Thursday launched storage technology aimed at replacing computer hard disk drives as it targets the rapidly expanding memory devices market to offset slowing sales growth for smartphone memory chips.

Samsung is the world's top maker of the NAND flash memory chips commonly used in smartphones and solid state drives, or SSDs, which are faster, lighter and consume less power than hard disk drives found in most personal computers.

Global demand for SSDs is expected to grow by 75 percent this year to 78 million units, brokers Nomura said, while shipments of NAND chips for use in smartphones are expected to increase 41 percent, weakening from 44 percent last year and 58 percent in 2011, as smartphone sales growth starts to wane.

SSDs are widely used in high-end ultra-thin laptops such as Apple's MacBook Air but hard disk drives remain PC maker's dominant choice because of the huge price difference.

The 1 terabyte SSD Samsung launched costs $650 while a same-capacity hard disk drive by biggest manufacturer Western Digital Corp sells for less than $100.

Some analysts, however, expect hard disk drive usage in PCs to fall below 50 percent by 2015 as SSD prices fall and hybrid solutions emerge.

Chipmakers are also betting on SSDs to become a fresh earnings driver in the $24 billion flash memory market, which is currently booming thanks to strong demand for cut-price tablets and smartphones in China.

Samsung is building a $7 billion chip plant in China, while Toshiba Corp and SK Hynix are also boosting production.

SSDs are likely to account for nearly a quarter of total flash memory sales this year from 15 percent this year, according to Daewoo Securities, and this proportion is set to rise to 45 percent by 2015.

Samsung accounts for around 40 percent of global NAND flash market and competes with Toshiba, Micron Technology and SK Hynix. In the SSD market, it competes with Toshiba, Sandisk and Intel.

© Thomson Reuters 2013