Samsung To Build £966m Semiconductor Plant

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Samsung hopes to take advantage of growing mobile market with chip business, even if smartphone profits fall

Samsung is to build a new £966 million semiconductor plant in South Korea as the company seeks to boost its mobile chip presence in the face of falling smartphone profits.

The investment is the single largest it has made in a single factory, with construction of the planned 790,000 square metre facility, located in Pyeongtaek, set to start in the first half of 2015.

Samsung is the world’s largest smartphone manufacturer but its profits have been hit by slowing handset sales in developed markets while intense competition from low-cost devices in emerging nations is also hampering growth prospects.

Samsung semiconductor plant

Samsung Galaxy Alpha (4)To compensate, Samsung has targeted the enterprise market with services like the Knox mobile device management platform, but it hopes that by growing its semiconductor business, it can help meet demand for mobile chips and continue to take advantage of increasing smartphone adoption.

Profits slumped for the second consecutive quarter during the period between April and July, with the mobile handset division contributing profits of £1.2 billion from sales of £16 billion and the semiconductor business providing profits of £1.2 billion on revenues of £9.3 billion. It possible that the later could overtake the former in the next set of results.

“Our investment into the new fabrication plant will significantly influence the shaping of Samsung’s future semiconductor business,” says Oh-Hyun Kwon, CEO and vice chairman of Samsung.

Samsung is also expanding into wearables, with its range of Samsung Gear smartwatches looking to compete with the likes of the Apple Watch and Moto360.

The Gear 2, Gear 2 Neo, Gear Fit and Gear S devices all run Tizen, an open source operating system being promoted by Samsung and Intel among others, but the Korean manufacturer has cancelled the launch of its first smartphone running the platform, leading to doubt about its future.

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