Samsung to invest over $ 30 billion in semiconductor manufacturing for the first time

As noted by the Nikkei Asian Review, last October Samsung Electronics expected to spend about $ 26.5 billion in investments in production at the end of the year. This is 28% more than in the previous year, as well as a record amount in the entire history of the South Korean company. Capital expenditures for this year will exceed $ 30 billion, once again breaking the record. According to suppliers of lithographic equipment, Samsung has set an increase in core costs by 20-30% for the current year.

Samsung Electronics’ operating profit growth dynamics in the past year allows for such investments – in the production of semiconductor components, it increased to 27% in the first nine months of 2020. Smartphone production, for example, brought Samsung only 12%, while in the consumer electronics segment, the profit margin did not exceed 8%.

Other manufacturers of memory cannot boast of such profitability indicators. The Korean SK Hynix profit margin did not exceed 17%, and the American Micron Technology was content with 19%. The increase in cash flows allows Samsung to invest more actively in expanding production. The main capital investment this year will go to the development of the Pyeongtaek facility near the capital of South Korea. The volume of production of solid-state memory in Chinese Xi’an will also be increased, while Samsung’s production lines in Texas will be modernized.

In the memory market, prices have begun to recover due to the growth in demand for smartphones from Chinese brands and the revival of the data centre market. The scale of the business allows Samsung to achieve better negotiating terms with customers while maintaining profit margins higher than the competition.