Samsung Electronics has announced plans to build a $14.7 billion semiconductor plant south of Seoul that will produce logic or memory chips.
Samsung, the largest maker of memory chips in the world, is looking to its most profitable unit – the semiconductor division – to make up for falling margins in the hyper-competitive smartphone market, where prices of handsets have plummeted to below $100 for some 4G models.
Low-cost makers in China and India have curbed its once stellar growth. The company’s handset unit has faced two consecutive quarters of declining operating profits, and analysts expect it to post a third in its next report.
Its global share of the smartphone market has dropped from about 31 per cent last year to 25 per cent in the first half of this year. Sales fell almost 20 per cent during that period.
While the global smartphone market is forecast to grow by nearly 20 per cent to 1.2 billion units this year, Fitch Rating expects Samsung’s shipments during the period to remain flat.
Its new investment aims to tap into that growth at the upstream component level.
Samsung said the new facility will employ 150,000 people when it is completed in the second half of 2017. The investment is its largest in a single facility and will increase its chip production capacity by a “low double-digit percentage”, Reuters said.