Samsung spends big on new chip plant

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Samsung is planning to spend almost €12 billion building a new semiconductor plant in Korea as it looks to rebalance its electronics business.

Construction on the 790,000m2 site, which will be located withing Samsung's Godeok Industrial Complex in Pyeongtaek, will start by the end of June next year. Samsung said work at the new complex is likely to start by the end of 2017.

The electronics company said: "The new fabrication plant is expected to help Samsung meet growing demand for advanced semiconductor products, while also further solidifying the company’s global presence and market leadership by realising its vision for a globally balanced semiconductor fabrication network."

The move appears to underline fears within Samsung about its future revenue streams. It announced its first drop in net profit in three years in July, warning the second half of the year would be a "challenge".

While the company remains the world's biggest phone maker, its second quarter sales for tablets and smartphones fell.

However, Samsung’s semi-conductor business is expected to grow, thanks to the booming demand for smart devices.

According to recent research from Gartner, the global semiconductor business will be up 7.2 percent this year, with sales of $338 billion (€268.8 billion). The market is expected to grow by 5.8 percent next year, driven by demand for entry level devices and high-end smartphones.

Dr. Oh-Hyun Kwon, CEO and Vice Chairman of Samsung Electronics, said: "Our investment into the new fabrication plant will significantly influence the shaping of Samsung’s future semiconductor business."

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