Samsung accounted for 15 per cent of global chip production last year

Samsung's semiconductor division is increasingly affected by geopolitical uncertainty, but challengers are unlikely to displace it, at least in the short term.

"For the foreseeable future, I think our market share will remain where it is, if not going up," a Samsung executive said on May 13th.

The US and Europe have stepped up investment in the sector after a shortage of automotive chips linked to the outbreak heightened concerns about reliance on foreign manufacturers of key technology.

But analysts say an immediate challenge to Samsung's leadership is unlikely.

Velu Sinha, a partner at Bain & Company, an American strategy consultancy, says: "If you have a new OEM coming online by 2025, you should be breaking ground on that contract this year. So it's not likely that what's happening now is going to change the landscape for the next two to three years."

Samsung has dominated the production of DRAM chips and NAND for decades, but its warning to challengers is not based solely on past performance. Samsung believes its position is secure because of advances in manufacturing technology and the increasing cost of making chips.

Samsung vs. TSMC for the top spot in semiconductor spending

"The pace is picking up at the moment," Sinha said. "It's hard for an established company like Samsung to continue to do research and invest, and it's not easy for other suppliers."

Ever since Samsung's founders, Lee Byung-chul and Lee Kun-hee, invested in semiconductor development in 1974 against the opposition, armies of engineers have focused on a single task: figuring out how to store more data on ever smaller chips.

Samsung accounted for 15 per cent of global chip production capacity at the end of 2020, putting it ahead of TSMC and memory chip rival Micron Technology.

The global share of chip production capacity of each company

Samsung also argues that it has a leading position in intellectual property and engineering expertise that it can defend. Samsung's spending also dwarfs digital initiatives in the United States and the European Union.

In addition, Samsung has spent $93.2 billion in the semiconductor business over the past three years, according to IC Insights, which said: "To catch up with Samsung and TSMC in the semiconductor race, the EU and the U.S. would need to spend more than $30 billion annually for at least five years to have a chance of success."