Samsung plans 21.4t won South Korea investment amid chip boom

[SEOUL] Samsung Electronics Co Ltd said on Tuesday it plans to invest at least 21.4 trillion won (S$25.76 billion) in South Korea as it seeks to extend its lead in memory chips and next-generation displays for smartphones.

The world's biggest memory chip maker by revenue said the spending plan includes 14.4 trillion won by 2021 for its new Nand manufacturing facility in Pyeongtaek. It will invest 6 trillion won in a new semiconductor production line in Hwaseong, but did not elaborate on timing or product.

The firm also plans to add another production line to its Nand production base in Xi'an, China, seeking to respond to booming demand for chips used for long-term data storage. It said it has not yet set an investment amount or time frame.

Samsung and other memory makers are widely expected to post record profit in 2017 as a persistent chip shortage and demand for more capability in smartphones and servers lift prices.

Industry sources and analysts said the supply shortage is more acute for Nand chips due to increasing adoption of high-end storage products.

Samsung and rivals including SK Hynix Inc have committed tens of billions of dollars to boost Nand output in recent years, yet analysts and industry sources said shortages are likely to persist at least through 2017 as new facilities will not make meaningful supply contributions until next year.

Some analysts said the additional capacity could lead to slight Nand oversupply in early 2018, but that price crashes are unlikely as smartphone makers opt for greater internal storage.

Demand for high-end server storage for services such as cloud computing and virtual reality applications will also grow.

In China, some Korean firms have been scaling down operations after retaliatory measures from Beijing over the deployment of a US anti-missile defence system outside Seoul, but components makers such as Samsung have not yet been affected.

Samsung accounted for 40.4 per cent of global memory chip revenue in January-March, showed data from researcher TrendForce, making it difficult for electronics makers to avoid buying chips from the South Korean firm entirely.

Samsung also said unit Samsung Display plans to invest around 1 trillion won on a new organic light-emitting diode display complex in South Korea.

REUTERS