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Amid global shortage, Samsung to invest $205B in semiconductors, AI

By Park Eel-kyung & Kim Tae-gyu, UPI News Korea
Samsung announced plans to invest $205 billion during the next three years in areas such as semiconductors, biotech and artificial intelligence. UPI News Korea File Photo
Samsung announced plans to invest $205 billion during the next three years in areas such as semiconductors, biotech and artificial intelligence. UPI News Korea File Photo

SEOUL, Aug. 26 (UPI) -- Samsung announced this week that it will invest $205 billion over the next three years in semiconductors, artificial intelligence and other areas.

The figure, announced Tuesday, is $50 billion more than the target from its 2019-21 investment plan, which was announced in 2018. The investment is expected to help address the global shortage of automotive semiconductors.

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The shortage began early this year, halting assembly lines across the globe. It chipped away at the expected revenue of major automakers for 2021 by billions of dollars.

"The automotive chip shortage will continue at least into the third quarter of this year. This issue may resurface any time there is a shortage of foundries," Daelim University automotive Professor Kim Pil-soo told UPI News Korea.

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Samsung did not reveal how much it will spend on each area, but it is expected that a substantial part of the investment will be directed to semiconductors.

"Once we lose competitiveness in semiconductors, it is almost impossible to bounce back. Therefore, our plan for survival is to invest aggressively in semiconductors," Samsung said in a statement.

Kim said Samsung's investment in foundries signals its efforts to roll out more automotive semiconductors to ease the shortage faced by carmakers.

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"If Samsung takes immediate action, semiconductors for newly built cars may hit the market as early as late 2022. This is because construction for foundries does not take a long time," he said.

Samsung's announcement was made 11 days after its chief Lee Jae-yong was released on parole. He was imprisoned in January for bribing former President Park Geun-hye.

Kim said Lee's early release may have been influenced by the Korean government's sense of urgency regarding the shortage in automotive chips.

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Samsung, the world's largest memory chipmaker, has faced stiff competition from companies such as Intel and Taiwan Semiconductor Manufacturing Co.

TSMC, the world's leading contract chip manufacturer, recently said it will invest $100 billion over the next three years to expand its capacity.

"Compared to its competitors in the semiconductor market, Samsung's announcement of its investment plan comes somewhat late, as the company's leader Lee Jae-yong was imprisoned," Park Ju-gun, CEO of South Korean business tracker Leader's Index, told UPI News Korea. "Samsung will have to put in a lot of effort to catch up."

In contrast, Professor Han Tae-hee of Sungkyunkwan University said Samsung's decision appears to be timely.

"Through this investment, Samsung is trying to sharpen its competitive edge in the global market for memory chips and challenge TSMC in the foundry market," Han said in a telephone interview.

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"Samsung is also expected to acquire more companies -- possibly, to narrow the gap between itself and TSMC in the foundry market," he said.

In its announcement, Samsung also said it hopes to drive growth in areas such as next-generation networks, artificial intelligence and robotics. The conglomerate also said it is trying to boost its pharmaceutical business by supporting subsidiaries such as Samsung BioLogics and Samsung Bioepis, amid the COVID-19 pandemic.

Samsung said it will strengthen its market leadership via an aggressive merger and acquisition initiative.

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