Tuesday, July 4, 2017

Samsung plans to invest $18.6 billion to extend its lead in display panels and memory chips

Samsung is the current world leader in storage and memory chips segment, and it has announced that it is planning to invest around KRW 21.4 trillion (approx. $18.6 billion) in South Korea to extend its lead in the memory chips and display panel market. Around KRW 14.4 trillion of this capital, which will be spent by 2021, will be dedicated to the company’s NAND chips manufacturing factory in Pyeongtaek, South Korea.

The South Korean electronics giant also mentioned that it will invest around KRW 6 trillion to set up a new semiconductor production line in Hwaseong city in South Korea. However, Samsung didn’t mention any time frame for this investment. The company also plans to add an extra production line to its NAND plant in Xi’an, China for ramping up the production capacity of storage chips. Although, the final investment amount or a time frame wasn’t announced.

Samsung Display will also invest KRW 1 trillion on a new OLED manufacturing plant in Korea. Thanks to the booming demand for memory and storage chips, Samsung and its competitors are expected to rake in record profits this year. Apparently, there’s a shortage of NAND chips due to increasing adoption of high-end storage solutions in devices like smartphones and servers. Industry experts say that the shortage for storage chips will continue in 2017 even though the brands have invested billions of dollars.

I believe NAND market conditions will continue to favor suppliers until 2020. Any oversupply issues will be temporary and limited to seasonally weaker periods” said HMC Investment analyst Greg Roh. Samsung is said to be at least a year ahead of its rivals Toshiba and SK Hynix as the former invests $10 billion annually. The new investment is expected to create an additional 440,000 jobs in South Korea, which will help in boosting the economy.

Thanks to increasing demand of high-storage capacity smartphones, virtual reality applications, and cloud storage, demand for NAND chips is expected to grow. Chinese smartphone brands are the biggest buyers of display and semiconductor chips from Samsung. China is trying to be self-reliant in making these chips, but it will be years before Chinese brands can even compete with global giants like Samsung and Toshiba.