“Samsung may invest as little as 7 trillion won or some $6.4 billion on chip facilities next year as its top priority is to clear inventory amid sluggish demand for computer chips this year,’’ said a source, Wednesday.
This is the smallest investment in four years since the Korean tech firm invested 4.1 trillion won in 2009. This year, Samsung invested 15 trillion won.
“Since 2010 ? the year when Lee Kun-hee took back leadership of the company ? we have been invested over 12 trillion won, annually. Simply put, conventional memory chips are no longer a cash-generator,’’ said the source.
“With the reduced investment, Samsung will start the operation of flash-type chip production in China from 2014 with an initial monthly output of 30,000 wafers. Samsung earlier promised the Chinese government it would produce 70,000 wafers per month,’’ said the source.
Samsung is building its first Chinese plant in the western part of Xian with a total investment of $7 billion.
The company confirmed that it has delayed construction of a new logic-chip plant dubbed Line 17 in the regional city of Hwaseong, Gyeonggi Province due to the possibility of losing orders from Apple.
“No big spending is expected. Because the Line 17 plan was put on hold, there is no reason to make a heavy investment,’’ said the source.
Line 17 was previously scheduled to start mass production in the first quarter of 2014. In June 2012, Samsung announced the plan with construction scheduled to be completed by the end of this year.
By halving its investment on chips next year, Samsung plans to upgrade existing facilities into thinner and advanced technologies, according to the source.
At its plant in Austin, Texas, the company is converting production to logic chips including processors increasingly used in tablets and smartphones. About $3.5 billion will be invested for the conversion process by the end of next year.
“It’s inevitable for Samsung to heavily cut its investment on traditional memory chips as the era of PCs is phasing out. It’s the right move to concentrate on the non-memory business as it’s much more profitable,’’ said Joo Dae-young, a senior researcher at the semiconductor division of the Korea Institute for Industrial Economics and Trade.