Samsung plans to invest $18.6 bn in South Korea amid chip boom

PanARMENIAN.Net - Samsung Electronics Co Ltd said on Tuesday, July 4 it plans to invest at least 21.4 trillion won ($18.63 billion) in South Korea as it seeks to extend its lead in memory chips and next-generation displays for smartphones, Reuters reports.

The world's biggest memory chip maker by revenue said the spending includes 14.4 trillion won by 2021 on its new NAND factory 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 will also add a production line to its NAND plant in Xi'an, China, in response to booming demand for long-term data storage chips. It has not set an investment amount or time frame.

Samsung and other memory makers are widely expected to post record profit in 2017 as a persistent shortage and demand for more capability in smartphones and servers lift prices. Industry sources and analysts said the shortage is more acute for NAND chips due to increasing adoption of high-end storage products.

Some analysts said Samsung's production technologies are at least a year ahead of rivals such as Toshiba Corp and SK Hynix Inc. Samsung routinely invests more than $10 billion in semiconductors annually, helping build its lead, and analysts said the latest investment seeks to widen the gap.

Samsung, Toshiba and SK Hynix 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 cause slight 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 cloud computing and virtual reality applications will also continue to grow.

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