Samsung to invest $7 billion in Chinese chip plant
Samsung Electronics' semiconductor factory in Xian, China
By Kang Seung-woo
Samsung Electronics is seeking to solidify its lead in the NAND memory chip sector with a massive investment in China.
The world’s largest semiconductor company said Tuesday it will inject $7 billion (7.87 trillion won) to beef up its NAND memory production in its Xian plant. Samsung opened the world’s largest semiconductor plant in Pyeongtaek, Gyeonggi Province, last month, seeking to meet surging demand for state-of-the-art 3D NAND flash chips.
To this end, management has approved $2.3 billion of the new investment over the next three years.
“The investment is aimed at meeting rising demand for NAND flash products in the mid-to-long term,” said a Samsung official.
Samsung is currently the world’s No. 1 chipmaker in both DRAM and NAND flash memory sectors _ the former used for computers and the latter for mobile devices.
The company will discuss the plan with the Chinese government, hoping to break ground within this year and start production in 2019.
The Xian facility, established in 2014, is fabricating 120,000 3D NAND flash chips per month.
The expansion plan is a countermeasure to fully supply the NAND flash memory to the Chinese market, where Samsung is expected to see a growing demand for the chip to be used for data centers, big data, artificial intelligence and in the automotive sector.
Recently, the global chip market is in short supply and Samsung is taking advantage of the memory chip “super cycle,” which helped it reach a record profit in the second quarter of the year.
Last month, Samsung reported an operating profit of 14.07 trillion won in the cited period and its chip business was the key driver at 8.03 trillion won.
The global NAND memory market was worth $37 billion and Samsung notched a 36.1 percent market share over distant runner-up Toshiba’s 17.4 percent.
Also, industry tracker IHS Markit forecast that this year’s NAND flash market will advance 25 percent year-on-year to $46.5 billion and to $56.5 billion in 2021.
Last month, Samsung announced it would invest 37 trillion won in expanding manufacturing facilities for chips and display panels by 2021.