Samsung to invest $1B more to make chips in Austin

Samsung sign at ctia

Samsung announced plans to step up its chip business by investing $1 billion in its semiconductor factory in Austin, Texas, in the first half of next year as it tries to regain its footing in the wake of the Galaxy Note 7 debacle.

The South Korea-based giant said it will boost production of chips for mobile devices and other gadgets from its existing facilities in Texas’ capital. Samsung, which is the world’s second-largest chipmaker behind Intel, said last week it plans to spend $24 billion in capex this year, with roughly half of that amount going toward its chip business.

The company spent $4 billion in 2012 to renovate its Austin chip factory.

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Samsung continues to suffer the fallout from the disastrous release of the Note 7, which forced the company to issue recalls after some batteries overheated and caught fire. The company last week posted a third-quarter profit of roughly $4.6 billion, down significantly from its previous estimate, as revenue slid 7 percent year-over-year.

And Samsung’s Note 7 nightmare lingers in part because the vendor hasn’t determined why some devices caught fire. If it can’t find a solution soon, it may have to delay future product releases, including the upcoming Galaxy S8.

"What is important is clearly investigating the cause," Lee Seung-woo, an analyst at IBK Securities, said, according to the AP. "It cannot develop a new product on top of the imperfect platform of the Galaxy Note 7, which had all of Samsung's latest technologies."

Samsung remains the top smartphone vendor in the world, but it is aggressively pursuing components and other markets as mobile penetration rates reach saturation in markets around the world. Last month it said it had become the first company to mass-produce system-on-a-chip products using 10-nanometer FinFET technology, enabling it to create chips that are significantly more efficient than prior-generation chips.

The company is also said to be investing heavily in the production of OLEDs to prepare for next year’s release of the iPhone 8.

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