Samsung to Invest in New Domestic Memory Chip Line

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Samsung Electronics Co Ltd has decided to begin investment to build a second memory chip line at its Pyeongtaek production facilities in South Korea.

Chipmakers are investing heavily to meet booming demand for semiconductors and Samsung said last year it planned to invest 30 trillion won ($27.63 billion) in its Pyeongtaek factory by 2021 to expand capacity.

“We are currently reviewing the second phase of investment for our Pyeongtaek semiconductor manufacturing site, which involves the construction of the structural foundation of a facility,” Samsung said in an email to Reuters when asked to comment on the Yonhap report. “The investment is aimed at better preparing for future market demand. Any details related to production will be determined after taking market situations into account,” it said.

Analysts say if the second semiconductor manufacturing line is completed on a schedule that is common in the industry, Samsung is expected to mass produce chips from the newly built line around 2020, which can soften prices of memory chips. “Currently prices in memory chips are too high with tight supply. Not only Samsung but other chipmakers are boosting investments, which I think is positive in a way that it can lower prices,” said Greh Noh, an analyst at HMC Investment and Securities.

Samsung’s first semiconductor production line at Pyeongtaek began mass production in July last year. In late January, the world’s biggest maker of semiconductors posted a record annual profit driven by a so-called memory chip “super-cycle,” and said it expects demand for semiconductors to remain strong in 2018, especially for chips used in servers.

The Yonhap report comes two days after Samsung Electronics Vice Chairman Jay Y Lee left a South Korean jail a free man as a panel of judges suspended his sentence for charges that included bribery and embezzlement. “After this year’s scheduled investment into the first Pyeongtaek line is over, it will be operating at more than 70 percent capacity,” Lee Jong-wook, an analyst at Samsung Securities, wrote in a note on Wednesday. Share prices in Samsung fell 3.4 percent on Wednesday, pressured by heavy foreign selling, versus the wider market’s 2.3 percent drop.

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