Tech giant strives to generate new revenue sources
Samsung Electronics plans to invest 133 trillion won ($115 billion) by 2030 to sharpen its competitiveness in non-memory chips such as system LSI and foundry businesses.
The Seoul-based company said on April 24 that the bold scheme is aimed at achieving its goal of becoming the world’s top player in non-memory chips in a decade.
Toward the end, the tech giant will also generate 15,000 jobs in research and development (R&D), and production so that it will be able to strengthen its technological prowess.
“The investment through 2030 will be composed of 73 trillion won for domestic R&D and 60 trillion for production infrastructure,” a Samsung Electronics official said.
“Per this plan, investments in R&D and facilities for logic semiconductors are expected to amount to an average 11 trillion won per year until 2030.”
Samsung Electronics, an indisputable world leader in the memory-chip industry, raked in huge profits over the past several years thanks to rising demands. But the highly volatile memory market shows signs of tailing off.
This prompts the company to seek new cash cows in the non-memory industry where Samsung has struggled to compete with global powerhouses such as Intel and Qualcomm.
Included in Samsung’s primary targets are system LSI and foundry.
Brief for large-scale integration, the former is a type of integrated chip, which brings together a large number of transistors. It enables the development of efficient chips to power smartphones, self-driving cars, and artificial intelligence-enabled devices.
The latter refers to a fabrication plant, which churns out semiconductors outsourced by design facilities.
As of last year, Taiwan’s TSMC accounted for 50.8 percent of the foundry market followed by Samsung with 14.9 percent. There were rumors that Samsung thinks of taking over No.3 player GlobalFoundries whose market share was 8.4 percent.
The plan seems to be huge financial investments, but Samsung piles up cash reserves amounting to almost $100 billion.
As of the end of last year, its cash reserves are more than $90 billion, up 20 percent from a year ago, thanks to its handsome revenue thanks to handsome revenue from memory chip sales. Samsung netted some $40 billion in profit last year.
And its debts are negligible compared to its cash in hand at less than $10 billion.
Of note is that President Moon Jae-in has urged the industry to focus more on the non-memory sector to reduce the country’s dependence on the memory chip business.