Samsung announces new focus on automotive chips

Samsung Electronics' P2 plant in Pyeongtaek,Gyeonggi, which is under development. [NEWS 1]

Samsung Electronics plans to bolster its automotive chip business and make heavy investments into advanced chip and display manufacturing technology this year, according to its annual report that disclosed last year’s record high investment in facilities and equipment.

The direction, announced Tuesday, came at a delicate time when manufacturers wrestle with an ongoing global chip shortage that started in the auto industry and had spread to other businesses.

The electronics maker said that it will take further steps to find new business opportunities in chips for automobile and wearables and customized system-on-chip segment, although it didn’t specify how it will lead the way.

“[Samsung Electronics] plans to find and expand new businesses in automotive and wearable chips and custom system-on-chips that are expected to show robust growth, while increasing the client base in foundry,” the report read.

It doesn’t appear that the statement is generic since auto chips were never cited as an area of focus in recent years in the report.

Samsung currently produces processors to power in-vehicle infotainment systems and sells them to Audi and Tesla, which currently account for only a fraction of Samsung’s sales.

Samsung also set the goal of drawing more new clients into its foundry business. Foundry refers to a business that fabricates chips based on design by external clients.

Foundries, and especially market leader Taiwanese firm TSMC and Samsung, are operating at full capacity to meet the surge in demand for chips for computers and other electronic products for people working or studying at home during the coronavirus pandemic.

To cope with the increasing demand, the company invested a total of 38.5 trillion won ($33.7 billion) into building plants and facilities mainly for semiconductor production last year, marking the second highest annual spending on construction in its history.

Of the 38.5 trillion won, 32.9 trillion won went toward the chip sector as Samsung ramped up advancements in manufacturing processes.

Another 3.9 trillion won was spent on developing production lines for next generation quantum dot (QD) and organic light emitting diode (OLED) displays.

This trend will carry on this year.

“This year’s facility investment will be focused on advancing or expanding memory and system chip production lines and increasing capacity for display plants,” it said.

Industry insiders predict Samsung could continue its aggressive chip investment this year as both foundry and memory chips like dynamic random access memory (DRAM) and NAND Flash enjoy a surge in demand.

Samsung recently revised up the capacity of a production line in Pyeongtaek, Gyeonggi under development, upgrading from 28,000 wafers of 5 nanometer chips to 43,000 monthly, according to local media reports.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]