Massive Investment in
Non-Memory Chips

Samsung Electronics to boost non-memory chip production to equal production of memory chips

Samsung Electronics, the leading memory semiconductor chip producer in the world, will invest 8 trillion won in the manufacturing facilities for non-memory chips in order to be the top producer in that sector, as it already is in the memory chip sector with products such as D-RAM and NAND flash memory, the company said recently.
According to Samsung and industry sources, Samsung Electronics is ready to plunk down 15 trillion won in its chip manufacturing facilities next year, the largest investment in its history and some 50 percent more than the 10 trillion won the company plans to invest this year.
The company's total investment would amount to around 23 trillion won this year, compared to 21.6 trillion won invested last year. The company will invest 8 trillion won in the system LSI chip production facilities and 7 trillion won in memory chip production facilities with investments in the non-memory sector exceeding those in the memory sector for the first time.
The company invested 3 trillion won in the system LSI chip production facilities last year, and this year the investment amount will total 4.2 trillion won in the same facilities and double again next year. Sales of the chips will rise from 70 to 80 percent this year from last year to record 10 trillion won for the first time.
The most noticeable growth among the company's products has been the mobile application processor, which dominated the global market with a share of 62.6 percent last year and continues to dominate this year, too.
One of the reasons for the company's superb performance in the third quarter has been the outstanding sales of the system LSI, which helped the company become the top seller of smartphones, even beating Apple in the quarter.
Samsung Electronics posted surprising third quarter results with sales revenue of 41 trillion won, up 1.9 percent YoY, and operating profit down 13.6 percent YoY, a smaller drop than analyst estimates, preliminary figures showed.
The largest electronics maker in Korea recorded sales of 40.23 trillion won in the same period last year and 4.86 trillion won in operating profit last year, the company said.
The sales revenue during the first three quarters came to 117.42 trillion won, up 4.1 percent YoY, with operating profit down 23.7 percent YoY at 10.9 trillion won, the company said. The results are more astounding as they came amid a global economic slump and lawsuits brought against the company by Apple.
The company's operating profit is about 1 trillion won more than estimated by securities analysts, which for the first time in the company's history exceeded 10 percent of sales revenue. The surprising record has been attributed to smartphone sales rising more than 40 percent from the previous quarter, ranging from 26 million to 28 million units, bringing the total operating profit of communication equipment to more than 2 trillion won.
The semiconductor sector did all right, too, despite the fall in prices of DRAM chips, thanks to cuts in costs and excellent sales of specialty products, including application processors, as well as growth in the production of LSI, posting about 1.3 trillion won in operating profit.
Amid global economic uncertainty and slumping sales of TV sets around the world, the company has been able to secure a dominant share of the smart TV and other premium electronics product markets to keep its sales rising.
But the LCD sector continued to bleed red ink for three consecutive quarters this year.
Securities analysts project Samsung Electronics would have a better fourth quarter with prices of chips and LCDs expected to recover, along with the release of new models of smartphones and tablet PCs.
They singled out the sales of the Galaxy S2, which rocketed to 3.6 million units in the four months through September, claiming 55 percent of the domestic cell phone market in Q3, which has been of great help to Samsung's outstanding results. nw

Vice Chairman Choi Ji-sung of Samsung Electronics.
Photo on courtesy of Samsung Electronics