Samsung to Invest $28 Billion in Semiconductors This Year... Austin Plant Shutdown Remains a Variable

[Image source=Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Amid the semiconductor supercycle, Samsung Electronics is expected to invest $28 billion (approximately 32 trillion KRW) in the semiconductor sector this year. As it fiercely competes with Taiwan's TSMC, the number one foundry (semiconductor contract manufacturing) company, in developing advanced process technologies, Samsung is anticipated to demonstrate its determination to take the lead by pouring in massive funds. In this context, Samsung's semiconductor plant in Austin, USA, which has been shut down for a month following a power outage caused by a cold wave, is expected to become a variable affecting both performance and investment.

On the 16th (local time), market research firm IC Insights forecasted that Samsung Electronics and Taiwan's TSMC will invest a combined $55.5 billion in the semiconductor sector this year. This accounts for 43% of the total capital expenditure in the semiconductor industry, marking the highest-ever share for the top two companies in capital spending.

In particular, IC Insights projected Samsung Electronics' semiconductor-related investment to be around $28 billion this year. Since increasing its semiconductor investments from 2017, Samsung invested $21.6 billion in 2018, $19.3 billion in 2019, and $28.1 billion last year, with this year's investment expected to be similar to last year's level. IC Insights explained, "Samsung's investment from 2017 to 2020 totaled $93.2 billion, an unprecedented level in semiconductor industry history," adding, "This amount is more than double the $44.7 billion invested by Chinese semiconductor companies during the same period."

According to IC Insights data, Intel was the largest investor in the semiconductor sector from 1994 to 2003. However, except for 2009, Samsung Electronics has been the top investor for 13 consecutive years up to last year. With the semiconductor industry's supercycle seemingly in full swing this year, and rival TSMC announcing a record $28 billion capital expenditure in January, Samsung Electronics is highly likely to respond actively.

At the shareholders' meeting held on the 17th, Samsung Electronics Vice Chairman Kim Ki-nam stated, "Samsung Electronics' process competitiveness in the semiconductor foundry business is not inferior to competitors," and added that the company will strengthen leadership in ultra-fine process technology and reduce the gap with competitors through efficient investment.

However, Samsung Electronics' Austin semiconductor plant, which has halted operations for a month since February 16 (local time), has emerged as an unexpected variable. This is the first time Samsung's semiconductor plant has stopped operating for over a month. The plant has yet to resume operations, and the recovery timeline remains uncertain. Nearby semiconductor company NXP recently began initial operations, but Samsung's plant, which involves many delicate processes, is still undergoing maintenance. Samsung has dispatched technical personnel urgently to the Austin plant to minimize shutdown damage and expedite the resumption of operations.

As the plant shutdown period lengthens, the estimated damage is growing. Considering that the Austin plant's average daily sales last year were 10.7 billion KRW, the current estimated damage exceeds 300 billion KRW. This incident occurred while Samsung Electronics was reviewing expansion plans for the Austin plant and negotiating with the state of Texas, drawing attention to its potential impact on investment.

This content was produced with the assistance of AI translation services.