The electronics giant announced a $24 billion domestic investment, showing its will to dominate as the memory chip market soars at home and abroad.
With demand for more sophisticated features in smartphones and servers booming, chipmakers worldwide are gearing up for record profits in 2017. Samsung, Asia’s third most valuable company, is already in a dominant position: It accounted for more than 40% of global memory chip revenue in the first quarter of 2017, according to research firm TrendForce. For the full year, its profits from memory chips could be unprecedented.
Samsung routinely invests upwards of $13 billion in memory chips annually. Now it has the opportunity to rake in higher profits while widening its lead. Chip prices are being pushed to record highs by a persistent supply shortage. The shortage is resulting from high demand for better storage technology, needed to accommodate the widening adoption of high-end storage products.
Analysts say the shortage is particularly acute for NAND chips, which have high storage capacity and are particularly desirable in small devices that handle big files – such as smartphones. Samsung, local rival SK Hynix and Japan’s Toshiba have all committed billions to boost their NAND output. In July Apple chose Samsung to supply NAND chips for its new iPhone 8, set to launch later this year. Toshiba and SK Hynix also supply NAND chips to Apple, but have struggled to keep up with demand.
The stars are lining up in other ways as well. Samsung’s announcement of a massive investment in Korea comes at a time when the country’s new president, Moon Jae-in, is urging large companies to invest more domestically as part of a push for job creation, the Globe and Mail reports. Samsung said its investment of at least $24 billion could add up to 440,000 new jobs by 2021. Its plan calls for putting about $16 billion into a new NAND factory in Pyeongtaek by 2021. The company will also invest more than $6 billion in a new semiconductor production line in Hwaseong.
The brisk market for advanced smartphone displays is also on Samsung’s radar. The company’s display unit plans to invest about $1 billion in a new organic light-emitting diode (OLED) display factory in Korea. Samsung Display already controls more than 90% of the market for OLED smartphone screens.
