Samsung to build 2nd chip plant in Pyeongtaek

By Jun Ji-hye

Samsung Electronics plans to build a second chip-production line in Pyeongtaek, Gyeonggi Province, to better meet surging global demand for semiconductors, industry sources said Wednesday.

If the second production line is similar in size to the first, the cost is estimated to be about 30 trillion won ($27.8 billion)

Earlier in the day, a management committee of the tech giant approved a preliminary investment to establish the second fabrication line at its semiconductor base in the city, 70 kilometers south of Seoul, sources said.

The committee, composed of three top executives _ Kwon Oh-hyun, Yoon Boo-keun and Shin Jong-Kyun _ agreed to start the construction, according to sources.

“The plan received endorsement without opposition,” a source said.

The decision is drawing attention as it is the first investment decision since Samsung Electronics Vice Chairman Lee Jae-yong was released from prison, Monday, after an appeals court reduced his prison sentence to a suspended term.

Lee had been in detention for about a year, and was given a five-year jail term Aug. 25 after being found guilty on five charges, including bribery, embezzlement and hiding assets overseas. The case was part of former President Park Geun-hye’s massive corruption and influence-peddling scandal that led to her impeachment.

The world’s largest chipmaker opened the first production line, which mass-produces 64-layer 3D NAND-Flash chips, in Pyeongtaek in July. At the time, the firm spent 15.6 trillion won on the construction, and later decided to spend an additional 14.4 trillion won to extend the line for DRAM manufacturing.

NAND-Flash chip is used for mobile devices such as smartphones while DRAM is a crucial part of computers.

Sources said Samsung had discussed construction of a second production line for months, based on the belief that high demand for memory chips will continue for the time being.

They added that officials have been in talks with Pyeongtaek local government over the construction of the new production line.

A Samsung official said the firm has yet to determine details such as end products at the second line and the amount of investment.

“Such decisions will be made later in accordance with market conditions,” he said on condition of anonymity.

Lee Jong-wook, an analyst at Samsung Securities, noted that the second production line is expected to mass-produce both NAND flash and DRAM chips like the first one.

“In addition, the company is expected to install clean rooms at the second line for extreme ultraviolet (EUV) exposure processes,” he said.

The analyst added the firm would continue to increase its investment in memory chips, raising the possibility for the company to announce the construction of a third production line in Pyeongtaek later in the year.

Eo Kyu-jin, an analyst at eBest Investment & Securities, echoed Lee’s view, saying it was quite obvious that new clean rooms will need to be installed.

Other analysts said Samsung’s latest decision was proof that the booming cycles of the semiconductor industry will continue, saying it will positively impact chip-making-related businesses in general.

Meanwhile, Vice Chairman Lee has kept a low profile since being released from prison.

He was seen leaving his residence in Hannam-dong at about 9:30 a.m. Tuesday, but his destination was unknown.

Samsung insiders noted that Lee met executives somewhere in Seoul.