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Samsung to build $14.7B IC fab

Posted: 17 Oct 2014 ?? ?Print Version ?Bookmark and Share

Keywords:wafer fab? smartphone? tablet? A8?

Samsung plans to invest $14.7 billion for a new, cutting-edge wafer fab, which will be built in Pyeongtaek, a city south of Seoul.

The new fab, slated to begin production in 2H17, will add to Samsung's current impressive compilation of wafer fabs (Figure 1) as it seeks to maintain its leading position in memory IC sales and expand its system leadership beyond smartphones, Smart TVs and tablets.

Investing large is not new to Samsungit has allocated at least $10 billion per year on semiconductor capital expenditures since 2010 (Figure 2), and has accounted for 17-21 per cent of total industry capital expenditures each year since then.

 Samsung's wafer fabs

Figure 1

Samsung did not identify specifically which chips will be manufactured at the new fab, but given its current market strength in smartphones, Smart TVs and tablet PCs, it is reasonable to believe the company will set up operations to produce logic and memory devicesDRAM, flash memory,including perhaps its new 3D V-NAND flash memory, and application processorsthat are the brains and storage in these systems.

In addition, the growing adoption rate for solid-state drives (SSDs) and the potential growth and development of the Internet of Things are emerging market segments that Samsung believes will fuel demand for its memory and logic chips in the coming years.

Samsung is also likely to give strong consideration to foundry operations at the new fab. Samsung previously lost the Apple A8 processor business to TSMC, but despite losing its $2 billion customer, foundry work remains an important segment for Samsung, and the company is committed to growing this business. Its leading-edge manufacturing capabilities make it an attractive option for several fabless and fab-lite logic IC companies.

Samsung's capital expenditure

Figure 2

The decision by Samsung to build a new, large wafer fab comes at a time when the semiconductor industry is facing several major hurdles. These include the transition to 450mm wafers and EUV lithography, the physical limitations of manufacturing existing DRAM and flash memory designs using sub 10nm process technology, and the possible transition to alternative memories.

On one hand, the company faces some big decisions on which way to proceed, but investing now assures Samsung will be at the leading edge in manufacturing and delivering advanced devices at a competitive cost.

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