Samsung eyes 7tr won investment in chips

Samsung Electronics plans to invest around 7 trillion won ($6.05 billion) in its semiconductor business next year – 5 trillion won in DRAM and 2 trillion won in NAND flash memory and system LSI, an industry source told The Korea Herald.
The world’s top memory chip maker’s investment plan is a 75 percent jump from this year’s projected 4 trillion won of investment in its semiconductor business. It reflects growing optimism about the global chip industry, which is emerging from more than a two-year slump, analysts said.
“Lee Youn-woo, chief executive of Samsung Electronics, and Kwon Oh-hyun, president of Samsung’s semiconductor division, said in November the company looks to invest around 7 trillion won in its semiconductor business next year,” a high-ranking industry official told The Korea Herald on condition of anonymity because of the sensitivity of the issue.
A Samsung spokesperson yesterday declined to comment.
Announcing its third-quarter earnings in October, Samsung said it looks to invest “more than” 5.5 trillion won in its memory business, adding that the company did not finalize its investment plan. The company did not disclose the portion of its spending on DRAM or NAND businesses.
Samsung is the top maker of both DRAM chips and NAND flash memory chips, controlling 35.5 percent of the global DRAM market, and 39.3 percent of the NAND market as of the third quarter of this year, according to market research firm iSuppli. DRAM, short for dynamic random access memory, is widely used in PCs, while NAND chips are used in mobile phones, MP3 players and other portable electronic devices.
Analysts expect Samsung’s investment next year will exceed 5.5 trillion won, citing the bright outlook for the memory chip market.
“The DRAM market will do far better than this year. I expect Samsung to invest more than 5.5 trillion won in its semiconductor business next year,” Suh Do-won, an analyst at Hanhwa Securities, told The Korea Herald yesterday.
“Samsung previously spent as much as 7 trillion won on its semiconductor business. When there is a clear sign of economic improvement, Samsung will increase its investments,” he said.
Lee Ka-keun, an analyst at IBK Securities, also told The Korea Herald: “In my view, what Samsung meant by ‘more than 5.5 trillion’ won is that it will spend more if the market conditions are better than expected.”
The industry official also said Samsung executives were bullish about the market outlook for the next three years.
Kwon said in October that it expected the memory chip market to grow at an annual rate of 16 percent from next year, while the overall semiconductor market is expected to expand 11 percent. The market leader aimed to increase its semiconductor revenue by more than 50 percent in three years – to $25.5 billion in 2012 from an estimated $16.6 billion this year, according to Kwon. To that end, the company seeks to vigorously expand into non-memory business, while cementing its market leadership in the memory chip market, Kwon said.
“We expect a slight supply shortage in both DRAM and NAND markets next year,” he was quoted as saying by a Samsung Group spokesperson.

Courtesy of The Korea Herald