The Korea Herald


Samsung, SK hynix to make record-high investments in 2017

By Catherine Chung

Published : Aug. 2, 2017 - 09:51

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Samsung Electronics Co. and SK hynix Inc. are anticipated to make record investments to expand and upgrade their facilities this year, industry sources said Wednesday, amid the global boom in mobile and computer chips.

The two South Korean tech giants plan to allocated a whopping 30 trillion won ($26.7 billion) to secure sustainable growth following their robust performances, sources said.

Samsung Electronics has injected some 12.5 trillion won in facility investment over the first half of the year, which is nearly equal to 13.1 trillion won spent for the whole of 2016.

(Yonhap) (Yonhap)

Experts said Samsung's combined investment for 2017 may reach 20 trillion won, with some analysts even forecasting 29 trillion won.

South Korea's No. 1 chipmaker is expected to focus investment on V-NAND flash and image sensor products, along with its foundry business. The foundry business refers to making chip designs for other companies that do not have a semiconductor fabrication plant.

"The investment is not just about the on-going boom of chip industries," a Samsung official said. "The record-high investment is made based on the analysis on mid- to long-term demand for products."

Samsung Electronics posted an operating profit of 8.03 trillion won in the second quarter for its chip business, soaring from 2.64 trillion won posted a year earlier, on the back of the rising demand for server DRAMs and SSD products. It marked the first time for the chip business to post an operating profit exceeding 8 trillion won. 

(Yonhap) (Yonhap)

SK hynix also decided to invest a whopping 9.6 trillion won in facilities this year, seeking to expand production capacities for dynamic random-access memory chips and NAND flash memory.

The amount marks an increase from 7 trillion won originally planned earlier this year.

"The investment plans to cope with the market's rising demand for DRAM and NAND flash products, while preparing for a long-term future," a SK hynix official said.

The country's No. 2 chipmaker also said its second-quarter operating profit advanced 573.7 percent on-year to reach a record 3.05 trillion won.

Industry watchers said the rising amount of investment, however, may lead to an excessive surge of production capacity, eventually leading to a production surplus and decrease in prices. (Yonhap)