Samsung Electronics scaled back its facility investment by two trillion won in 2019 due to uncertainties in the business environment and a slump in the semiconductor market.
The company’s earnings announcement released in January showed it invested a total of 26.90 trillion won in facilities last year. The figure represented a drop of about 2.1 trillion won from its investment plan announced three months earlier
In its third quarter earnings announcement made at the end of October 2019, Samsung Electronics estimated its annual facility investment at 29 trillion won. As the company invested 16.8 trillion won in facilities by the third quarter of 2019, it planned to invest 12.2 trillion won in the fourth quarter alone.
At the time, Samsung Electronics planned to focus its fourth-quarter investment on infrastructure for memory production to meet mid- to long-term demand despite a slump in the semiconductor market. In addition, the semiconductor giant planned to introduce extreme ultraviolet (EUV) lithography to sharpen its foundry competitiveness and next-generation strategic quantum dot (QD) displays. To this end, it planned to invest 9.9 trillion won in semiconductors and 1.6 trillion won in displays in the fourth quarter alone.
However, the global economic recession continued in the fourth quarter and demand for memory semiconductors from large IT customers has not recovered as much as Samsung Electronics expected. These circumstances forced it to make some changes in its investment plan. It postponed the completion of its new plants, including the Xian NAND 2 plant in China, the EUV-only line at the Hwaseong plant and Pyeongtaek Memory 2 plant in Korea, to 2020.
Under these circumstances, industry watchers predict that Samsung Electronics’ investment in semiconductor facilities this year will be similar to that of 2019. In 2017 when the semiconductor market enjoyed a super, Samsung Electronics initiated large-scale projects including the Pyeongtaek 2, Xian 2, and Hwaseong EUV projects and invested 43.4 trillion won, the highest-ever amount in its history. In 2018, it invested a total of 29.4 trillion won.
"Samsung's investment in semiconductors peaked in 2017," said an industry analyst. “Considering the fact that the memory semiconductor market entered a slump in 2018, Samsung Electronics is unlikely to invest more than 30 trillion won this year."