Samsung to invest $14.7 billion in South Korean chip facility
Mon 6 Oct 2014
In the light of Samsung’s diminishing grip on the smartphone market, the South Korean tech manufacturer, currently the largest IT company in terms of revenue, is to invest in a new microchip manufacturing facility 47 miles south of Seoul.
The new plant will create 150,000 jobs in the city of Pyeongtaek, which currently has a population of less than half a million, though it has not been announced whether it will fabricate logic or memory chips. Samsung became the No.1 producer of memory chips over twenty years ago, and currently stands second only to Intel for memory sales.
It will be interesting to see whether this is routine provisioning based on known roadmaps or preparation for new initiatives on the IoT – which Samsung committed itself to developing in July – and emerging consumer technologies. The company, founded in 1938, has a wide and often turbulent portfolio of products, including the now-defunct Samsung Music Hub, and in August of this year acquired the home automation company SmartThings. Last month Samsung announced the Gear VR, a virtual reality headset powered by the Samsung Notebook 4 phablet and developed in partnership with Oculus, creators of the much-touted Oculus Rift virtual reality technologies.
IM Investment analyst Lee Min-hee commented: “Right now the only part of the company that is bringing in steady profits is the semiconductor division, so it looks like the company will keep investing in the business.”
CEO and Vice Chairman of Samsung Electronics Dr. Oh-Hyun Kwon attended the signing ceremony for the new plant, and said in an official post by Samsung: “Our investment into the new fabrication plant will significantly influence the shaping of Samsung’s future semiconductor business.”
The facility is at least in part intended to help the company, which has 326,000 employees worldwide, to cope with increasing demand for semiconductor products. The factory will cover 850,000 square feet and is expected to be completed in the later quarters of 2017. Samsung is due to issue its earnings guidelines tomorrow, but the company is expected to show an operating profit of approximately $5.24 billion, the weakest since 2011. The Samsung smartphone range has lost market share over the last six months, with correlated losses in its general mobile operations.