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Samsung $14.3 Billion Chip Plant Aims to Secure Lead in IoT

May 7, 2015
The plant is the company's way of "secure a leading position in the next-generation Internet of Things market.

SEOUL -- Samsung (IW 1000/12) kicked off Thursday construction of a new chip plant to help fuel growth as smartphone sales slow, saying it would invest 15.6 trillion won (US$14.3 billion) until production begins in 2017.

The South Korean electronics giant, which has seen a surge in demand for chips, broke ground on the new plant in the city of Pyeongtaek, 44 miles south of Seoul. 

Production at the 2.89 million square-meter plant will begin in the latter half of 2017.

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The investment of $14.3 billion is the largest amount the firm has ever committed to a single plant, it added. 

"The Pyeongtaek semiconductor plant will play a key role in strengthening our leadership in mobile and server (chip) market where demand has soared recently, and secure a leading position (in) the next-generation Internet of Things market," the company said. 

Samsung's chipmaking unit -- the world's second-largest after Intel -- has helped cushion a recent slump in the firm's smartphone business.  The company, which is the world's top maker of smartphones and handsets in general, has reported an on-year decline in net profit for four straight quarters. 

Last month it posted a near 40% fall in first quarter net profit, missing analysts' estimates, while operating profit of the key mobile unit dropped nearly 60% from a year ago.

However, operating profit of the semiconductor unit soared more than 50% on-year to 2.93 trillion won -- and was up 8.5% from the fourth quarter.

Samsung's semiconductor unit provides chips for handsets, computers and servers, and for Samsung products as well as other electronics giants including Apple. 

Copyright Agence France-Presse, 2015

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