Samsung to invest $18bn in chips

Samsung Profit Increases Sevenfold On Chip Prices

Samsung also said Tuesday it would invest 6 trillion won in an existing plant in South Korea's Hwaseong, but did not specify the products involved. Samsung Electronics will expand its fab in Xi'an, China, which has been running at full capacity after construction was complete in 2014.

Samsung will invest more than $18 billion over the next four years to expand its memory chip and smartphone businesses in South Korea. Out of the total investment, $12 billion will go to a new NAND production facility in Pyongteak and about $7 billion will go to another new facility in Hwaseong. Mounting memory chip sales have helped Samsung generate estimated record profits this year.

According to Samsung, its chip plant that opened in 2015 is now one of the largest semiconductor production lines in the world.

Demand will stay high, Samsung says, because the Internet of Things (IoT), artificial intelligence (AI), big data and automotive technologies all need more DRAM and flash. The South Korean company is seen as achieving a higher product yield in mass production of cutting-edge 64-layer 3-D memory than Toshiba, which claims the No. 2 share.

"With the dedication and support of our employees, customers and partners, our Pyeongtaek campus represents a new chapter in Samsung's semiconductor operations", said Kwon Oh-Hyun, vice chairman and CEO of Samsung Electronics.

While only a single line has been established at the new semiconductor plant in Pyeongtaek, the company aims to add more production lines through additional investments up to 2021.

The $18.6bn earmarked is a considerable increase from Samsung's already hefty yearly chip spend of $10bn and, on top of this, earlier this year Samsung announced it would build a $380m plant in the US. The manufacturer laid out plans in May to invest roughly 10 trillion won at a plant in the Chinese city of Xi'an and recently said it would put $1.5 billion into a system chip factory in the USA state of Texas. Part of the investment will also be used for the production of its next-generation OLED displays for smartphones.

The Samsung claim that these investments will create almost half a million new jobs.

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