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Samsung ups Pyeongtaek chip plant contract to $3B amid AI boom

Published: 20 Oct. 2025, 07:00 Updated: 21 Oct. 2025, 23:57

LEE JAE-LIM
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Samsung Electronics' Pyeongtaek chip plant in Gyeonggi [SAMSUNG ELECTRONICS]

[NEWS ANALYSIS]

Samsung Electronics is accelerating construction of its large-scale semiconductor plant in Pyeongtaek, Gyeonggi, spurred by its recent partnership with OpenAI and a global surge in memory chip demand driven by the rapid expansion of artificial intelligence infrastructure.

The Korean chipmaker is injecting a combined 4.2 trillion won ($3 billion) to accelerate completion of Phase 4 of its P4 facility, marking a 50 percent increase compared to the contract cost that was initially disclosed in July, according to September filings by Samsung Heavy Industries, Samsung C & T and Samsung E&A. The company has also moved up the completion date by three months to April 2027.

The construction for the unit resumed in July after a delay that lasted over a year. The P4 facility is divided into four phases. Construction of the P4 facility had been largely stalled for over a year amid a global semiconductor downturn before resuming in July.

The P4 complex consists of four phases — with Phase 1 operating as a hybrid line for NAND flash and dynamic random-access memory (DRAM) production, while Phases 2 and 4, originally planned as foundry lines, are now expected to prioritize next-generation high bandwidth memory (HBM4) to meet surging AI demand.

Amid speculation about an upcoming P5 facility, reports suggest Samsung is preparing to break ground to further expand capacity. However, a Pyeongtaek city official told the Korea JoongAng Daily that no temporary occupancy permits have yet been issued — documents required for limited site use such as equipment installation, test operations or restricted work force entry.

According to KB Securities analyst Kim Dong-won, the rapid adoption of AI is set to drive robust growth across the broader memory market — extending beyond HBM to conventional DRAM used in servers, graphics and mobile devices.

“Orders from major customers such as Nvidia, AMD, and Broadcom are surging simultaneously,” Kim said. “Starting next year, we expect shortages and price hikes in general DRAM, which will narrow the profitability gap between HBM and traditional memory faster than anticipated.”

Samsung is among the key suppliers for OpenAI’s $500 billion Stargate project, a global data center initiative jointly led by SoftBank and Oracle that aims to build 20 large-scale AI data centers in the United States by 2029. Together with SK hynix, Samsung will supply roughly 900,000 high-performance DRAM wafers per month, according to OpenAI’s projections.

If realized, analysts estimate monthly HBM demand could exceed 1 million units, far surpassing Nvidia’s current consumption of 150,000 units per month. Current global capacity is expected to reach only 400,000 units by year-end, Digitimes Asia reports.

To meet this explosive growth, both Samsung and SK hynix are expected to recalibrate their production road maps. Presidential Director of National Policy Kim Yong-beom said at an Oct. 1 briefing that the chipmakers’ existing plants would need to “double in scale,” emphasizing the need for additional facilities.

Samsung Securities analyst Lee Jong-wook projects the ongoing chip upcycle to be longer and more sustained than past recoveries.

“The fact that growth momentum has continued for three consecutive years is the first such trend since the internet infrastructure boom three decades ago,” he said. “Moreover, memory demand has decoupled from consumer market cycles, making it resilient to prolonged weakness in smartphones and PCs.”

Document capture from Taylor City showing the location map for final plat approval of Samsung Electronics’ Taylor chip plant. [TAYLOR CITY]

Meanwhile, Samsung’s Taylor plant in Texas — which has secured marquee customers including Apple and Tesla — is progressing toward final plat approval, a key land entitlement step that finalizes site boundaries and public infrastructure obligations. Once approved, the plant is expected to become operational in 2026, marking the final stage before long-term expansion and eligibility for CHIPS Act incentives and infrastructure reimbursements.