Samsung to invest $205 billion in chip, biotech expansion

The company said Tuesday it would invest 240 trillion won in capital expenditure and research and development over the three years, up from 180 trillion won in the previous three.

The release of Samsung’s de facto leader, Lee Jae-yong, from prison last week—a parole the Justice Ministry attributed in part to “economic factors”—has raised expectations of bolder moves from the company. Mr. Lee’s supporters argue that Samsung failed to make big strategic decisions and delayed investments while competitors charged ahead amid a historic chip shortage that has elevated semiconductors to the top of national agendas.

One key decision awaiting Mr. Lee’s approval is the location of a planned Samsung Electronics Co. semiconductor plant in the U.S. The $17 billion chip factory will be a key part of the Korean company’s bid to compete in the foundry business—making chips under contract for the companies that design them. Taiwan Semiconductor Manufacturing currently dominates the foundry business, and Samsung faces new competition from Intel Corp., which recently announced plans to get back into the business of making chips for others.

Samsung has been considering sites in Texas, New York and Arizona since at least January.

TSMC plans to plow $100 billion into extra chip capacity over the next three years. Intel’s planned spending is lower, though it is exploring a deal to buy GlobalFoundries Inc. for around $30 billion, The Wall Street Journal has reported, citing people familiar with the matter.

On Tuesday, Samsung reiterated that it would pursue mergers and acquisitions to “solidify technology and market leadership.”

Samsung Electronics, which has more than $80 billion in net cash, hasn’t sprung for a major acquisition in roughly four years. But on its second-quarter earnings call last month, the company said it would seek one within three years, citing artificial intelligence, 5G mobile networks and automotive tech as potential target areas.

Though Samsung didn’t break down the new investment plan by business division, a large part of the spending is likely earmarked for crown jewel Samsung Electronics, the world’s biggest maker of memory chips and a major player in the global chip-foundry business.

The conglomerate pledged to speed up previously announced investments by Samsung Electronics in logic-chip technology and foundry expansion and said it would continue with technology upgrades and infrastructure investments in its memory-chip business, “with a focus on meeting mid-to-long-term demand rather than short-term changes in market conditions.”

The South Korean conglomerate will also push to expand its contract drug-manufacturing business led by Samsung BioLogics Co. and its biosimilars-development business led by Samsung Bioepis Co.

With the latest investments, Samsung Biologics plans to build two new plants, adding to three in operation and a fourth under construction, as it considers the business of manufacturing vaccines and cellular- and gene-therapy products.

The company has produced biologic drugs for some of the world’s largest pharmaceutical companies, including Bristol-Myers Squibb Co. and Roche Holding Ltd.

In May, Samsung Biologics signed a deal to provide fill-and-finish packaging for hundreds of millions of doses of Moderna Inc.’s Covid-19 vaccine. It is working to add drug-substance-manufacturing capacity for messenger-RNA vaccines, and would need to expand the arrangement with Moderna or strike new ones with other pharmaceutical companies to gain a bigger foothold in global vaccine production, industry analysts say.

On Tuesday, Samsung also pointed to batteries as a target for investment. Samsung SDI Co., in its earnings call last month, said it planned to enter the U.S. electric-vehicle battery market, but didn’t say when. The company is scouting a number of U.S. sites for a battery plant, including Illinois, a Samsung SDI spokesman said.

“Samsung would be investing roughly an additional 20 trillion won annually over the next three years into chips, batteries and biotech, compared to its past investment in the last three years,” said CW Chung, head of Asia technology research at Nomura. “In that sense, it is a notable increase in investment.”

This story has been published from a wire agency feed without modifications to the text