Samsung to invest $18 bn in memory chip business
Samsung Electronics will invest nearly $18 billion in its chip business, the South Korean firm said yesterday, as it seeks to expand its lead in the global memory chip and smartphone markets. The world's top maker of smartphones and memory chips will invest 20.4 trillion won ($17.7 billion) by 2021 to expand and upgrade its chip plants in the South Korean cities of Pyeongtaek and Hwaseong, it said in a statement.
The factory in Pyeongtaek, 70 kilometers south of Seoul, is the world's biggest and has recently started production after Samsung Electronics spent 15.6 trillion won over the past two years to build it. The company also plans to expand its NAND chip plant in the Chinese city of Xian to meet booming demand for the chips used in high-end storage products, it said. It did not elaborate on when and how much money it plans to invest there. In smartphones, Samsung has been increasingly sandwiched by smaller Chinese rivals in the low and mid-end markets, and by Apple's iPhone in the high-end segment.
Samsung-which accounted for more than 40 percent of global memory chip sales in the first quarter of this year-posted in April its biggest quarterly net profit in more than three years. "Our clients are having difficulty securing enough semiconductor chips due to growing global demand for high-tech gadgets," it said. "We plan to actively respond to those demands by making aggressive investments on our production lines at home and abroad," it said.
Analysts say a global shortage of chips may persist throughout 2017, driving prices higher and benefiting major suppliers such as Samsung and another South Korean chipmaker, SK Hynix. Average prices for DRAM chips used in PCs and servers, and NAND flash chips used in handsets are expected to jump 53 percent and 28 percent respectively this year, according to market researcher IC Insights. The announcement also came after newly elected South Korean President Moon Jae-In set tackling rising unemployment as his top priority. Samsung said its investment would eventually help create as many as 440,000 jobs through 2021, including indirectly, and help bolster Asia's fourth-largest economy.
Samsung to sell recycled Note 7
Elsewhere Samsung Electronics plans to recycle and sell its recalled Galaxy Note 7 phones starting this week in South Korea, salvaging their unused parts. The Galaxy Note FE phone will go on sale in South Korea on Friday at 700,000 won ($611), about three quarters of its original price, the company said late Sunday.
Samsung said the Note FE has "perfect safety" - unlike the recalled versions that were found to be prone to overheating and catching fire. The supply will be limited to 400,000 units. Overseas sales plans will be determined later, the company said in a statement. The original Note 7 was one of the biggest black eyes in Samsung's history. When it was launched in August 2016, the Note 7 was Samsung's answer to Apple's upcoming iPhone. It was also one of the most expensive Samsung phones with the price starting at $850. After reports emerged that its batteries were prone to overheat and catch fire, Samsung recalled the phone in less than a month of its launch and released another one with replaced batteries. The second batch also tended to overheat, prompting Samsung to discontinue the Note 7.
The debacle dealt a blow to Samsung's corporate image. Aviation authorities around the world banned the pricy phone on flight and photos of scorched Note 7 circulated on social media. Samsung spent billions of dollars to recall the Note 7 and fix its damaged brand. The company released investigation results that blamed flaws in design and production of batteries supplied by two battery makers.
After the recall of millions of Note 7 phones, environmental activists have pressured the South Korean tech giant to reuse the electronics parts to reduce waste. Samsung said the Note FE is part of its effort to minimize waste. Like the previous Note series, the Note FE, short for "Fan Edition," features a jumbo screen measuring 5.7 inches (14.48 centimeters) diagonally and a stylus. — Agencies