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Samsung Electronics, the world’s largest memory chipmaker, on Monday announced an additional Won1,000bn ($1bn) investment to increase capacity of its semiconductor business to meet growing demand for memory chips.
The announcement came as the South Korean chipmaker reported a better-than-expected 16 per cent rise in third-quarter profit, driven by firmer prices of D-Ram chips and strong sales of handsets and flat-panel TVs.
Samsung said it was able to supply only 70 per cent of D-Ram orders to major customers due to strong demand, and expected the momentum in the memory chip business to continue throughout this year. The additional investment will bring Samsung’s total investment in the semiconductor business to Won6,660bn, which accounts for 65 per cent of the company’s total capital spending this year.
“The momentum in the memory business is so strong that we can’t meet demand with the current capacity,” said Chu Woo-sik, Samsung’s head of investor relations. “The increased facility investment underlines our confidence [in the memory market].”
Mr Chu expected prices of D-Ram chips, used in personal computers, to remain strong in the fourth quarter and next year.
He also forecast the market for flash-memory chips, used in mobile digital devices, to stabilise with slower price declines. The company achieved operating profit margins of 26 per cent in the semiconductor business, which accounts for one-third of total sales.