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Samsung Makes Largest Single Investment Ever into Pyeongtaek Factory
15 Trillion Won
Samsung Makes Largest Single Investment Ever into Pyeongtaek Factory
  • By Cho Jin-young
  • May 8, 2015, 04:00
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Park Geun-hye (center), president of South Korea, Lee Jae-yong (2nd from left), vice chairman of Samsung Electronics, and other major figures press blasting buttons at the groundbreaking ceremony of Samsung's new Pyeongtaek factory.
Park Geun-hye (center), president of South Korea, Lee Jae-yong (2nd from left), vice chairman of Samsung Electronics, and other major figures press blasting buttons at the groundbreaking ceremony of Samsung's new Pyeongtaek factory.

 

Samsung Electronics used the official slogan “The Future Starts Here” for the groundbreaking ceremony of its new Pyeongtaek semiconductor complex on May 7. It showed the high expectations of a new chip production line by citing its semiconductor business investment, which is the foundation of Samsung Electronics’ competitiveness, as an allusion to the future of the company.

In fact, Samsung Electronics decided to make the first investment of 15.6 trillion won (US$14.28 billion) in the Pyeongtaek complex. It is the unprecedented as the largest investment  ever in a single semiconductor production line in the world.

As Samsung Electronics, which maintains the indisputable top position in the memory semiconductor sector, has decided to make the large-scale investment three years after the extension of 17 lines in Hwaseong in 2012, the technological gap between competitors is expected to widen further.

Recently, BOE, the largest LCD maker in China, declared a push into the memory semiconductor market and presented blueprints to catch up with Samsung by 2020. However, this preemptive investment has raised the entry threshold, said semiconductor industry sources.

With Samsung recently succeeding in developing 14-nanometer FinFET process technology and the triple-level-cell (TLC) 3D V-NAND flash memory in succession, the company is overwhelming its competitors in semiconductor fine processing. It refers to a new technology to improve work process efficiency with less electricity by narrowing the circuit width of memory semiconductor substrates or piling one above another so that the company can gain comparative advantages from its competitors’ products.

Even though Samsung was noted as lagging behind in technology levels in the system semiconductor sector, the company is also continuing its advance. As Samsung used its own application processor (AP) Exynos in its flagship Galaxy S6 and Galaxy S6 Edge smartphones, the company attained its long-cherished desire to get away from Qualcomm. In addition, it recently signed a contract with its biggest smartphone competitor, Apple, to supply its AP to the next model of the iPhone. So, the analysis came out that Samsung and Apple have entered the stage of “competitive cooperation,” getting out of long-running conflicting relations.

With the improvement in competitiveness, the DS sector seems to have a stronger position in the company. As Samsung Electronics saw operating profits of 3.39 trillion won (US$3.1 billion) in the DS sector in the first quarter, its performance was largely improved by the sector, along with the IT & Mobile Communications (IM) sector.

Also, there is keen interest on what products Samsung will be producing in the Pyeongtaek factory. Since it is the largest and the most advanced complex in the world, the global market can be even reorganized according to the products being produced in the line.

Samsung officially said, “Nothing is fixed yet.” However, industry sources believe that it is highly likely to produce memory chip products, with which Samsung stands unchallenged.

The production plan of the Pyeongtaek complex will be decided at the end of next year or the year after that. Memory semiconductor products such as DRAM and NAND flash are most likely to be produced. Lee Min-hee, an analyst at IM Investment and Securities, said, “For Samsung Electronics, non-memory products or system semiconductors, including foundry and mobile applications, still has enough equipment scale and high uncertainties. So, the company is unlikely to expand the line of such products. Pyeongtaek will become the production base of the memory products, which are the strength of the company, and the next generation products among them.” The main products of the new Pyeongatek line are expected to be 3D Vertical NAND, DRAM memory less than 20 nm in size, and also new types of RAM, like PRAM.

It is hard to conclude the list of production considering the fact that Samsung Electronics has so far flexibly controlled semiconductor production according to the change of management conditions. An official from the industry said, “The 17 lines of Hwaseong were originally for the production of system semiconductors only. However, the lines have changed the first stage for DRAM and the second stage for non-memory, as the demand of DRAM is significantly growing. So, the Pyeongtaek line can also change, even after the production plan is decided.”