Samsung to make big investment amid absence of its leader

Jul 05, 2017, 08:50 am

By AsiaToday reporter Kim Min-soo

Samsung Electronics plans to invest 37 trillion won ($32 billion) in the next four years in its memory chip and display plants as it seeks to stay ahead of its rivals and respond to a surge in demand for microchips and fast-growing global IT industry. The semiconductor market is expected to be one of the fastest growing market in the fourth industrial revolution. Most of global IT leaders have recently joined a bid to take over world's second largest memory maker, Toshiba. Samsung aims to strengthen its leading position in the memory chip market, and contribute to job creation and revitalization of the local economy.

◇ Samsung will invest 30 trillion won in Pyeongtaek, 6 trillion won in Hwaseong, and 1 trillion won in Asan

By 2021, Samsung will spend a total of 30 trillion won ($26.1 billion) to increase the capacity in its memory chip factory in Pyeongtaek Line 1, which began operating on Tuesday. The figure includes the previously invested 15.6 trillion won ($13.6 billion). In other words, the company will spend an additional 14.4 trillion won ($12.5 billion) in its Pyeongtaek plant.

The Pyeongtaek Line 1 will mass-produce 4th generation 64-layer 3D NAND flash-based SSD (Solid State Drive) for PCs, memory cards and consumers.

A Samsung official said, "Pyeongtaek Line 1 produces only 4th generation 3D NAND chips. Currently, it produces only SSD for PCs and it plans to release other products in the future." Samsung plans to expand production of the fourth generation 3D NAND chips to above 50% of its monthly NAND production by the end of the year.

Samsung will also invest 6 trillion won in its Hwaseong semiconductor plant. The company is reportedly considering to set up an additional plant next to Hwaseong Line 17. By investing 6 trillion won, it plans to secure a new line optimized to install state-of-the-art infrastructure including Extreme Ultra Violet (EUV) equipment in preparation for the future semiconductor market.

The remaining 1 trillion won will be invested to establish a new OLED manufacturing site in Asan, South Korea. A Samsung official said, "One trillion won will be invested only for establishment of the site. Samsung Display will announce its plans for full-scale investment later."

◇ Lee Jae-yong's absence casts long shadow over Samsung

The announcement is the first huge investment to be made in the absence of Vice Chairman Lee Jae-yong. Samsung expects that the investment would eventually help create up to 440,000 jobs.

Samsung, which is leading the global NAND flash chip market with 36.7% market share, has maintained the technological gap with its rivals by more than one or two years. However, Toshiba and Western Digital (WD) have started mass production of 64-layer 3D NAND chip this year and SK Hynix plans to mass-produce 72-layer 3D NAND later this year, narrowing the gap with Samsung.

However, Samsung's long-term investment plans are still unknown. As the absence of Vice Chairman Lee Jae-yong is prolonged, Samsung has not yet decided whether to expand its semiconductor plans in Hwaseong, South Korea and Xi'an, China.

A Samsung Electronics official said, "This investment decision is one of our plans that we set up last year. In the absence of the company leader, we are delaying our long-term plans."

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