Samsung Conference Call
Samsung Electronics, which is struggling owing to the limits of the smartphone market, is trying to overcome the crisis by heavily investing in B2B businesses such as semiconductors and displays. In particular, the company is planning to increase profits in the semiconductor business using market-leading products like 14 nm FinFETs, application processors, and 3D V-NAND flash memory chips.
"Our company is going to make a 24 trillion won [US$] of investment this year, similar to last year. We are planning to invest 14.4 trillion won [US$] in semiconductor and 5 trillion won [US$] in displays," said a Samsung associate in the July 31 Conference Call on 2014 Second Quarter Results. The official added that the firm plans to improve business development capabilities by strengthening its leadership in technology mainly with the components business.
In the semiconductor area Samsung is going to invest in the production process of semiconductor chips and the infrastructure of V-NAND flash memory chips. It will also invest in its System LSI division to exchange the existing manufacturing process for a cutting-edge one. In terms of the display field, the company is planning to supplement and enlarge the current OLED line.
The tech giant explained that the semiconductor memory market achieved double-digit growth in Q2, and the market will continue to grow. Hence, the firm established a strategy to have an increase in sales that exceeds the growth rate of the market.
On top of that, Samsung is aiming to sharpen its competitiveness in the market through strategic products such as 14 nm FinFETs.
Related to this issue, Baek Ji-ho, Director of Samsung Electronics’ Device Solution memory business, said, “14 nm FinFETs are scheduled to be mass-produced late this year, and we have been obtaining customer companies in a smooth way.” He added that the company’s sales are expected to come from the Exynos AP in the first quarter of next year, and the foundry market in the latter half.
In addition, S3, a new semiconductor line, is mainly going to produce DRAM, but the company is planning to respond to market conditions in a flexible way. As for 14 nm FinFETs, Samsung is going to secure profitability using the existing line.
Meanwhile, the company showed reservations about the expansion of dividends, since it is necessary to secure money for its investment in future growth engines.
Lee Myung-jin, who is in charge of investor relations, remarked, “It is not easy to decide on increasing dividends, since there are a lot of opportunity factors, such as wearable devices and the possible growth of the production process of 14-nm FinFETs.” He concluded by saying, “We ask shareholders to wait for some more time until dividends increase, because we believe that in the mid-long term, our continued growth will benefit them.”