Samsung Engineering and Samsung Heavy bag big P4 contracts

Samsung Engineering signed a 793.8 billion won ($622.1 million) contract with Samsung Electronics for a semiconductor plant construction project at the chipmaker’s manufacturing complex in Pyeongtaek, Gyeonggi.

Samsung Electronics chip manufacturing complex in Pyeongtaek, Gyeonggi [SAMSUNG ELECTRONICS]

Samsung Engineering signed a 793.8 billion won ($622.1 million) contract with Samsung Electronics for a semiconductor plant construction project at the chipmaker’s manufacturing complex in Pyeongtaek, Gyeonggi.

The engineering company will build a substation and other facilities at Pyeongtaek Line 4, a new factory also known as P4, at the Pyeongtaek complex, according to a regulatory filing Monday.

The size of the deal equals 10.6 percent of Samsung Engineering’s sales last year.

Samsung Electronics is the engineering company’s biggest client, with 30.94 percent, or 2.2 trillion won, of its total sales through September coming from the chipmaker.

Samsung Engineering is 11.69 percent owned by Samsung SDI, its largest shareholder. Samsung SDI’s largest shareholder is Samsung Electronics, with 19.58 percent ownership.

Samsung Heavy Industries said that day that it signed a 168.3 billion won deal with Samsung Electronics for the Pyeongtaek complex project.

Samsung Heavy Industries will also participate in the construction of the P4 factory, at the Pyeongtaek complex, according to a regulatory filing Monday.

The amount of the latest contract is equivalent to 2.5 percent of the company's annual sales last year.

Since 2020, the shipbuilding and construction company has logged 976.2 billion won of business from the Pyeongtaek complex construction project.

Samsung Heavy Industries has been moving away from the traditional construction business due to falling profitability and mainly focusing on shipbuilding. However, being in the red since 2015, the company has been actively participating in the Pyeongtaek project as a contractor to support its bottom line.

Samsung Electronics is the shipbuilder’s largest shareholder with a 15.23 percent shake.

The chipmaker is building six semiconductor factories at a site measuring 2.89 million square meters (713 acres) in Pyeongtaek through 2030.

Foundation work on the P4 factory began this year, and completion is scheduled for 2024.

The P3 factory, the third manufacturing facility in the complex, began operation in September. Including P4, three more production facilities are set to be built by 2030.

Samsung Electronics has its roots in Giheung, Gyeonggi, home to its first chip plant. But the Pyeongtaek complex has emerged as a primary manufacturing hub due to the state of technology deployed at the site and its sheer size.

The Pyeongtaek site is nearly the size of the combined complexes in Giheung and Hwaseong, according to the company.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]