Samsung to invest $116 bn in non-memory chips business

Samsung Electronics plans to invest $116 billion in non-memory chips through 2030, to cut its reliance on the volatile memory chip market, Reuters reported.
Samsung at CESSamsung aims to develop chips to power self-driving cars and AI-enabled devices – in a bid to take on Taiwan’s TSMC in contract chip manufacturing and US-based Qualcomm in mobile processing chips.

Semiconductor companies are in a race to produce chips to support technologies such as 5G mobile networks, connected cars and artificial intelligence (AI).

US chip supplier Nvidia in March agreed to buy Israeli chip designer Mellanox Technologies for $6.8 billion, beating rival Intel in a deal that would help Nvidia boost its data center and AI businesses.

Samsung, which has expanded its chip business largely through organic investment, said on Wednesday its 133 trillion won ($116 billion) spending will comprise of 73 trillion won for domestic R&D and 60 trillion won for production infrastructure.

“The investment plan is expected to help the company to reach its goal of becoming the world leader in not only memory semiconductors but also logic chips by 2030,” it said in a statement.

Samsung spent 29.4 trillion won in 2018 in capital expenditure and four-fifths of the budget went to the semiconductor division where memory chips generated 96 percent of the operation’s profit.

Samsung said the chip investment will create 15,000 jobs.

South Korea, the world’s biggest producer of memory chips thanks to Samsung and domestic rival SK Hynix, also wants to reduce its reliance on memory chip sales to smoothen volatile export trends.

The government is preparing its own support program for the non-memory chip sector.

Samsung is a second player in the foundry – or contract chip manufacturing – sector with a 19 percent market share, trailing market leader Taiwan Semiconductor Manufacturing (TSMC), according to industry tracker TrendForce.

Samsung also produces processor chips for mobile phones in a market dominated by Intel and Qualcomm.

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