Samsung to invest $14.7 billion in new fab

Samsung has a significant and growing business in memories and logic chips used in mobile devices and for enterprise computing

Samsung Electronics is investing 15.6 trillion Korean won (US$14.7 billion) in a new chip plant in South Korea to meet growing demand from smartphones, enterprise computing and the emerging 'Internet of Things' market.

Construction of the fab in a 790,000 square meter site in Godeok Industrial Complex in Pyeongtaek will begin during the first half of next year, with operations scheduled to begin sometime during the second half of 2017, Samsung said Monday.

Samsung, which is providing its third-quarter earnings guidance Tuesday, said in July its second-quarter profit fell nearly 20 percent year-on-year as a result of price competition in mid and low-end phones from Chinese manufacturers and sluggish demand in Europe.

The company's revenue at 52 trillion won in the second quarter was down by about 9 percent from the same quarter last year. Samsung also blamed its poor performance in the second quarter on weaker demand worldwide for tablets.

Its semiconductor business, which includes memory and logic chips, had revenue of close to 9.8 trillion won in the second quarter, up by nearly 13 percent from the same quarter last year.

A Samsung spokeswoman said a decision has not been taken yet on what type of chips would be made at the new fab and the manufacturing process. The company said in July it was on track to roll out 14-nanometer manufacturing process in volume by the end of this year.

The company also forecast strong demand for DRAMs and NAND flash storage in the second half of this year coming from mobile phones and high adoption of SSDs (solid-state drives) by enterprises and PC makers. The company has wafer fabrication facilities in Giheung and Hwaseong near Seoul and in Austin, Texas. It also does integrated circuit assembly and testing in Onyang in South Korea and Suzhou, China.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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