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11/22/2024 03:01:04 am

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Samsung to Invest Almost US$15 Billion in Chip Plant

Samsung Electronic's headquarters in Seoul

(Photo : Reuters/Kim Hong-Ji)

Samsung Electronics Co., Ltd said it intends to spend some US$14.7 billion to build a new chip plant in South Korea.

Construction will begin in Pyeongtaek located roughly 75 kilometers south of Seoul by 2015. The new facility is slated to start manufacturing chips by 2017, according to news reports.

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The company said the plant will create 150,000 jobs, which equates to around a third of the population of the city.

"Our investment into the new fabrication plant will significantly influence the shaping of Samsung's future semiconductor business," said Oh Hyun Kwon, vice chairman and CEO of Samsung Electronics.

The tech company is also set to disclose its financial results for its most recent quarter within the week. In July, the firm had a third straight quarter of profit declines, reporting a 25 percent drop in operating profits for the second quarter of the year.

At the same time, Samsung also said the remaining half of the year will "remain a challenge" as the number of competitors in the mobile phone industry results in lower device prices, which hurts sales.

Rivals such as Apple, Inc, which aims at the premium end of the market, and Lenovo Group, which is geared towards mid to low end smartphones, spurred Samsung to build the electronics plant, according to Reuters.

The higher demand for mobile devices, however, comes with an increased demand for chips used in gadgets, and the semiconductor division of Samsung Electronics will be crucial in propping up the firm's bottom-line, analysts said.

Samsung said the plant in Pyeongtaek will either make memory or logic chips. It said the final decision has not yet been made.

"Right now the only part of the company that is bringing in steady profits is the semiconductor division, so it looks like the company will keep investing in the business," said IM Investment analyst Lee Min-hee.

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