More reports on: Semiconductors

Samsung Electronics to invest $14.7 bn in new chip plant in S Korea

06 October 2014

Samsung Electronics has lined up investment of 15.6 trillion Korean won ($14.7 billion) for a new chip plant in South Korea to cater to the booming demand from smartphones, enterprise computing and the emerging 'Internet of Things' market, PC World reported.

Construction of the facility spread over a 790,000 square metre site in Godeok Industrial Complex in Pyeongtaek would start during the first half of next year.

Operations are scheduled to begin sometime during the second half of 2017, Samsung said today.

Samsung, which would provide its third-quarter earnings guidance tomorrow, said in July its second-quarter profit was down 20 per cent year-on-year as a result of price competition in mid and low-end phones from Chinese manufacturers and sluggish demand in Europe.

The company's revenue at 52 trillion won in the second quarter was down by about 9 per cent from the same quarter last year.

The company attributed its poor performance in the second quarter to weaker demand worldwide for tablets.

Its semiconductor business, which included memory and logic chips, had revenues of close to 9.8 trillion won in the second quarter, up around 13 per cent from the same quarter last year.

According to a Samsung spokesperson, a decision had not been taken yet on what type of chips would be made at the new fab and the manufacturing process.

The South Korean company is seeing increased competition from Chinese manufacturers such as Xiaomi and Lenovo and Apple's iPhone 6 had also been a huge hit, directly affecting Samsung's mobile business, even as the Korean manufacturer provided microchips for the latest Apple smartphone, Utah People's Post reported.

In fact, the chip unit clocked increased profit at 2.13 trillion won in the third quarter thanks mostly due to the business relation with Apple.

The Galaxy Note line, now in its fourth generation, is among the company's earliest and most successful bets. The company had introduced the phablet in 2011, when the first Note was released and while a 5.3 inches screen was considered huge in 2011, it later became a norm.

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