Samsung invests heavily in new chip plant | Business| Economy and finance news from a German perspective | DW | 07.05.2015
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Samsung invests heavily in new chip plant

South Korean electronics company Samsung has begun construction of a huge new chip plant south of Seoul that will play a major role in satisfying soaring global demand for high-end semiconductors.

Samsung on Thursday started building a huge new chip-producing facility some 60 kilometers (44 miles) south of Seoul.

The South Koreans broke ground on the new plant in the city of Pyeongtaek, saying they would invest 15.6 trillion won ($14.3 billion, 12.6 billion euros) until the planned start of production in 2017. It is the largest amount the firm has ever committed to a single factory.

"This plant will play a key role in strengthening our leadership in the mobile and server chip market where demand has soared recently. It will also secure us a leading position in the next-generation Internet of Things market," Samsung said in a statement, referring to a wide array of Internet-enabled devices from domestic appliances to cars.

Fierce price pressures

Samsung's chip-making division - the world's second-largest after Intel - has helped the South Koreans cushion a slump in its smartphone business with the rise of more rivals in China, India and elsewhere.

Samsung has reported a year-on-year decline in net earnings for four consecutive quarters despite being the top maker of smartphones again ahead of Apple.

But operating profit of the semiconductor unit skyrocketed by more than 50 percent in the first quarter year-on-year, up 8.5 percent from the final quarter of 2014.

hg/cjc (AFP, dpa)

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