Samsung Electronics has had an interesting few days. After a topsy-turvy year which saw them lose market share in their highly profitable smartphone business around the world, to Apple at the higher end and to Chinese and Indian upstarts like Xiaomi and Micromax at the entry-level in those regions, they finally seemed to be on the upswing once again with the launch of their flagship Galaxy S6 and Galaxy Note models and their unique curved edged variants in tow.
But consumer electronics is not just what the South Korean company does. It also happens to be the world’s largest memory chip manufacturer and competes in the market with their fellow Korean rivals SK Hynix amongst others. With adoption of smart gadgets on the rise, the use of memory chips inside most daily electronic devices becoming de rigueur, Samsung is betting big on the future of the semiconductor industry. Last year, Samsung had committed to spending around $14 billion on building a new production facility in Pyeongtaek, near Seoul, South Korea, that would start production in 2017. According to a report by Korean news agency MoneyToday, Samsung has now decided that they will invest a further $9.2 billion on construction and capacity expansion as it wants to be prepared for the future demand for DRAM (Dynamic Random Access Memory) chips and NAND (Negative AND) Flash chips, coming mostly from smart devices manufacturers, as these devices become more ubiquitous. The report also claims, that in the future, Samsung might also use the facility to produce mobile processors depending on demand. It is worth noting here, that Samsung has recently dropped Qualcomm from their list of vendors for mobile processors for their flagship devices. Instead, they’ve been minting their own silicon based on ARM’s architecture under the Exynos brand.
Samsung had previously tried to allay profitability concerns of analysts from this massive investment, saying that they will seek sustainable profitability from their semiconductor business rather than going all out for market-share, thereby affecting margins.
A Samsung spokeswoman denied any such investment plan over and above what had already been announced officially by the company last year. She also refused to speculate about what products might be manufactured in the upcoming facility.