Samsung plans $18.6bn investment in South Korea to preserve memory chip dominance

In a move set to create almost half a million jobs, Samsung has announced a sizeable chip investment in South Korea

Samsung's latest investment announcement reconfirms the company's commitment to its home country

On July 4, Samsung announced it would invest $18.6bn in South Korea, in a bid to hold on to its edge in the smartphone market. This sizeable investment will focus particularly on research and development for memory chips to safeguard Samsung’s lucrative status as the world’s biggest chipmaker.

As smartphones have become increasingly powerful, demand for suitable memory chips has soared. This has been a particular boost to Samsung which, as well as powering its own products, makes application processors designed by Apple and Qualcomm for phones.

The rising popularity of smartphones, and the accompanying decline of the personal computer, has seen Samsung emerge as the chief rival to world’s biggest maker of chips (not just memory chips), Intel. This quarter, Samsung was estimated to have knocked Intel off of the top spot for chip sales, generating $15.1bn to Intel’s $14.4bn, as reported by the Financial Times.

As smartphones have become increasingly powerful, demand for suitable memory chips has soared

The meteoric rise of the smartphone shows no sign of slowing, so this trend will likely continue, since Intel has struggled to make inroads in the mobile market. Mounting memory chip sales have helped Samsung generate estimated record profits this year.

The $18.6bn earmarked is a considerable increase from Samsung’s already hefty yearly chip spend of $10bn and, on top of this, earlier this year Samsung announced it would build a $380m plant in the US. After this US spend, the plan for South Korea, which could create up to 440,000 jobs by 2021, demonstrates Samsung’s commitment to maintaining the domestic arm of its production.

To read more about how Samsung has shrugged off a catastrophic 2016, complete with flaming devices and allegations of bribery, to emerge triumphantly into a very profitable 2017, see The New Economy’s special report.

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