Samsungs W7 Tril. Chip Investment to Be Cut
By Kim Yoo-chul
Staff Reporter
Samsung Electronics is highly likely to cut back on its plan to invest seven trillion won in the memory chip division this year, and postpone capital spending on its U.S. semiconductor factory due to the worsening global memory chip market situation.
Samsung planned to increase production of 16-gigabit NAND flash memory chips to 100,000 a month by the end of this year at its factory in Austin, Texas.
But the plan will probably be scrapped as further investment is unlikely within the remaining months of the year considering orders by local and U.S.-based equipment makers, industry watchers and market experts say.
"Samsung's total investment in chips this year will fall below five trillion won as boosting production of 12-inch NAND flash chips in its U.S. plant to 100,000 from 60,000 has been stalled over the past few months," a high-ranking industry source told The Korea Times, Sunday.
Earlier, Samsung said it would invest seven trillion won in its memory chip division this year, of which 1.5 trillion won was be earmarked for its U.S. factory. Some 3.5 trillion won has already been invested to get a production capacity of 60,000 a month.
Samsung confirmed a combined 3.4 trillion won in chip investment plan as of the end of July to upgrade and add lines at its existing factories in South Korea.
"The Austin factory will have a 100,000 wafer 12-inch chip capacity from the first quarter of 2009," the source said.
From December last year, Samsung has been producing 12-inch NAND flash chips using advanced 50-nanometer level processing technology there.
The chips, which save data in electronics devices even when power is switched off, are widely used in digital cameras and MP3 players thanks to advantages in providing higher storage and faster speed.
The 300 millimeter, or 12-inch, wafer is 2.25 times larger than the 200 millimeter, or eight-inch wafer.
A Samsung spokesman declined to comment on the investment issue.
NAND Woes
The move by the world's biggest NAND chip supplier has been in line with cutbacks by its rivals amid sluggish market conditions.
The fast-growing NAND sector has shown signs of falling into the same cyclical patterns as the older dynamic random access memory (DRAM) sector, with NAND heading into a downturn after a rapid build-up in global capacity.
Market research firm iSuppli slashed this year's NAND growth forecast to 9 percent to $15.2 billion from a previous 27 percent growth forecast, amid signs that buyers were sharply paring back their expectations for products using NAND-type chips.
Gartner also said any rebound in global chip demand could be delayed until 2010 as demand shrinks in the second half of the year and worldwide economic conditions worsen, while SIA forecast NAND chips will continue to slip as a result of continuing price erosion.
"For the time being, it seems risky to boost NAND chip production as the price of 16-gigabit NAND chip has fallen below manufacturing cost," a Samsung executive said.
The world's third-biggest NAND supplier Hynix recently decided to cut output by up to 30 percent starting this month to cope with prolonged oversupply and weak demand. But Japan's Toshiba and Samsung have no plans to follow suit.
"I don't think Samsung will follow moves by Hynix. But it will keep flexibility in its chip investment," the executive added.