Samsung to invest more capital as chip recovery confidence grows

P4 plant in Pyeongtaek, Gyeonggi Province. [Courtesy of Samsung Electronics Co.]

Samsung Electronics Co. plans to explore a shift back to an increase in capital investment away from production cuts as it has become confident of a recovery in chips.

According to industrial sources familiar with the South Korean chip giant on Tuesday, Samsung Electronics started ordering NAND flash equipment for its P4 plant in Pyeongtaek, Gyeonggi Province. The plant has been under construction and is expected to be completed by the end of 2024. The plant will house production lines for dynamic random-access memory (DRAM) chips and foundry in addition to those for NAND flash.

Samsung Electronics had focused on voluntary output cuts, which slowed its capital investment in response to the market downturn at the beginning of 2023. But the recent increase in capital investment reflects the tech firm‘s confidence in a full industry recovery.

Samsung Electronics posted a surprising operating profit of 10 trillion won ($7.2 billion) for the second quarter of 2024, with significant improvements in its semiconductor business, the driving force behind the record-breaking earnings.

The company expects a positive outlook for the second half of the year, due in good part to the soaring demand for enterprise embedded Solid State Drives (eSSDs). Industry sources also expect Samsung Electronics to increase the price of enterprise-type NAND flash by 15 to 20 percent in the third quarter of 2024, adding that the company’s fifth-generation HBM3E chips are expected to begin mass production in the second half of the year.