Report: Samsung To Invest Heavily In Memory Chip Plants

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Samsung has announced that it plans to spend around $18.6 billion to build and upgrade different production facilities that manufacture NAND memory chips. Out of the total investment, $12 billion will go to a new NAND production facility in Pyongteak and about $7 billion will go to another new facility in Hwaseong. The remaining amount of investments will go to another facility in the Xi’an, China where a new production line will be installed. Aside from the boost of production capacity that these new investments will bring, Samsung estimates that 440,000 new jobs will be created as the new production facilities hire necessary staff. These new jobs could also boost the economy of the areas where the memory chip factories are located through the increased spending ability of its residents.

The investments made on the production facilities are important to fulfill the growing demand for memory chips. As more smartphones and servers utilize NAND chips, manufacturers like Samsung, Toshiba, and SK Hynix have been struggling to keep up with the demand. Nonetheless, the high prices of the NAND chips resulted in a big boost in the profits of the major chip manufacturers. In the case of Samsung Electronics, high chip prices raised the profits of the South Korean tech giant to the point where it could possibly hold the distinction of being the most profitable company globally in the second quarter of 2017. The increase in chip production will only result in higher revenue for the South Korean electronics giant since the increased demand for memory chips is expected to continue until at least the year 2020. It will also take a few more years before Chinese manufacturers will be able to produce competitive memory chip offerings, so the three major chip manufacturers will still have the market all to themselves.

While the dominance in the memory chip business has surely helped Samsung’s bottom line, it is not the only division to do so. The tech giant’s display business, Samsung Display, was also able to generate substantial revenues for the company as its OLED panels are also in high demand. In contrast, the company’s smartphone business only fills up a minor percentage of the conglomerate’s overall operating profits even if it is the business that many consumers identify the Samsung brand with.