As noted last week, Samsung has decided to invest an additional $1.5 billion into its semiconductor business to up capacity, flood the market and ultimately reduce the number of its rivals. Now analysts wonder how effective this expensive new strategy will ultimately be and whether it's worth the risk. Samsung execs are foregoing quick profit recovery in its biggest moneymaker, its chip-making division, for longterm gains. The move is also an indication that the company wants to consume its $6 billion cash-on-hand by reinvesting some of it in its core businesses. Overall CAPEX for chipmaking at Samsung was originally predicted to reach $28 billion this year, a marked increase from last year's record-breaking $23.3 billion. So will $29.5 billion be too much?
For more on Samsung's strategy:
- read this article from the WSJ (sub. req.)