Samsung to invest $116B in logic chips as memory chip market shrinks

Samsung said 55% of the money will go toward its foundry business, and 45% will be allocated for R&D. (Samsung)

Samsung announced today it plans to invest 133 trillion Korean won ($116 billion) in its logic chip business over the next decade to strengthen its competitiveness in non-memory chip markets.

Samsung’s memory chip division experienced a boom last year, driving record quarterly earnings at a time when demand for memory chips was considerably higher than today. Its first-quarter 2018 net profit jumped 52% year over year, while sales jumped nearly 20%.

Since then, however, the market for memory chips has taken a downturn, and that shift has eaten into the company’s earnings. Samsung released earnings guidance earlier this month for what could be the company’s lowest profit quarter since 2016. The company said its profit will likely be 60% lower than in the first quarter of 2018. Still, it expects demand for memory chips to pick up in the second half of 2019.

In the meantime, Samsung is pivoting toward logic chips, which will be used in emerging market sectors such as 5G, connected cars and artificial intelligence. It's also hoping to grow its chip production arm, where it manufactures chips for other companies. Samsung said 55% of the new money will go toward its foundry business, and 45% will be allocated for R&D.

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The company is hoping to overcome chip rivals TSMC, Qualcomm and Intel with its new investments. “The investment plan is expected to help the company to reach its goal of becoming the world leader in not only memory semiconductors but also logic chips by 2030,” the company said in a statement.