Daily Management Review

Samsung invests $ 18.6 billion in South Korea


Samsung Electronics announced its intention to invest more than 21.4 trillion won ($ 18.6 billion) in the development and expansion of its production facilities in South Korea by 2021.

The company explained the desire to expand the production line by the overall growth in the world market demand for microchips. Samsung said that by 2021 it intends to spend 14.4 trillion won ($ 12.6 billion) to increase capacity of its fourth-generation V-NAND flash memory collection plant in the city of Pyeongtaek. Construction of the plant began in May 2015, now it is the largest in the industry.

Samsung also plans to send 6 trillion won ($ 5.26 billion) to its cluster to develop memory chips in the city of Hwaseong. In addition, the company is exploring the possibility of building a new plant for OLED technology in South Korea by 2018. Almost 1 trillion won ($ 0.88 billion) will be spent for these purposes. 

In addition, the company is considering a possibility of adding a semiconductors production line at its Chinese plant in Xian. The first line was built in 2014 and is now operating at full capacity, the company explained.

With new investments, Samsung expects to strengthen its global production network and accelerate the overall development of the IT industry. Samsung emphasizes that the latest trends in the industry - the development of the Internet of things, artificial intelligence, big data, automotive technologies - have sharply increased the demand for new high-tech products. Industry sources and analysts said that the lack of NAND chips is now more acute than ever because of the increased use of high-quality data storage systems, data centers and virtual reality systems.

In terms of the memory technology development, Samsung is ahead of its competitors, namely, Toshiba and SK Hynix. Each year, Samsung invests more than $ 10 billion in semiconductor business, which will soon allow the company to become a market leader.

Experts believe that growing production capacity in the flash memory market can lead to too large supplies of products in early 2018. However, the price crisis is unlikely to happen since smart phone manufacturers prefer to purchase more capacious drives.

According to preliminary data of Nomura analysts in April-June of 2017, sales of semiconductor products brought $ 15.1 billion to Samsung, while the same figure for Intel was $ 14.4 billion. It is expected that this year Samsung's semiconductor revenue will reach $ 63.6 billion, while Intel will finish the year with a result of $ 60.5 billion.

source: theguardian.com

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