The destination of Samsung Electronics vice chairman Lee Jae-yong’s first business trip for this year seems to be Xian in China. As Samsung Electronics recorded an earnings shock in the fourth quarter of last year, there is growing concern over the slowdown of the semiconductor market. Accordingly, Lee is expected to check the Chiense market as well as the company’s Xian plant, its only overseas memory chip production base.
Lee is planning to visit Samsung Electronics’ Xian plant in Shaanxi province, China, next month, according to industry watchers on Jan. 22. Samsung Electronics established its NAND flash chip production base in Xian in 2014 and it is now building the second plant by investing US$7 billion (7.92 trillion won). The new plant will start operation at the end of this year and begin mass production in the first half of next year.
Lee chose China as the destination of his first business trip in 2019 due to concerns over the recent downswing in the semiconductor industry. Samsung Electronics announced on Jan. 8 that its operating profit is estimated at 10.80 trillion won (US$9.54 billion) in the fourth quarter, down 28.9 percent from a year earlier. In particular, the company’s operating profit in the semiconductor sector came to around 8 trillion won (US$7.07 billion), a significant decrease from 13.65 trillion won (US$12.06 billion) at the previous quarter.
Concerns over the semiconductor market conditions are deepening as the amount of Korea’s exports in the semiconductor sector dropped by 28.8 percent as of Jan. 20 compared to a year ago.
Lee is forecast to meet officials from Huawei, Xiaomi and Oppo to check the semiconductor demand in China, Samsung’s largest market. He will also inspect the second plant in Xian which is now under construction to start mass production next year.