Samsung invests $22.6B in R&D, capex, adds 10,000 jobs

Suzanne Deffree, Managing editor, news -- EDN, May 17, 2010

Samsung Electronics Co Ltd today announced it will hire 10,000 new employees as it increases its total 2010 capex and R&D investment to 26 trillion won (about $22.6 billion), the largest annual investment outlay ever for the company.

The aggressive investment focuses on memory and LCDs (liquid-crystal displays) and dwarfs planned 2010 investments by many of the company's rivals, as companies across the electronics industry continue to recover from 2009's economic fallout.

Samsung said it made the investment decision "to address indications of improving market conditions throughout the global consumer electronics and IT industries, while further strengthening Samsung's leadership in memory semiconductors and LCD panels."  

Samsung hinted last month that big spending news was coming when it said it would "substantially" increase spending in 2010 after reporting record net income for the March quarter. As of that financial statement, the company had approximately 20 trillion won in cash.

"Although the global economic environment and business conditions remain changeable and uncertain, if we invest aggressively in expanding facilities and in hiring then these circumstances also present Samsung an opportunity for future growth and to stimulate the economy," Samsung Electronics Chairman Kun-Hee Lee said in a statement today.

Through the 2010 investment, approximately 18 trillion won will be invested in facilities, including 11 trillion won for semiconductor manufacturing and 5 trillion won to expand capacity for LCD panel production. About 8 trillion won will be invested in R&D.

With the investment in new manufacturing lines, Samsung expects to hire 10,000 new employees in 2010, including 3,000 for the semiconductor business and 4,000 for the LCD business.

Samsung made the announcement at a groundbreaking ceremony for a new memory line operation, Line-16, at its Nano City Complex in Hwaseong, Gyeonggi Province today. The line represents the first new production operation for Samsung since 2005 and is expected to begin producing 200,000 12-inch wafers per monthly in 2011. Line-16 is being constructed on approximately 560,000-square meters of vacant land within Samsung's 1.6 million-square meter Hwaseong complex and will cost approximately 12 trillion won to build.

Broken out, the investment will see Samsung's memory division increase its facilities investment for 2010 from its original plan of 5.5 trillion won to 9 trillion won. The additional investment includes establishing the new Line-16 for DRAM, NAND, and next-generation memory products in Hwaseong, and increasing the capacity of the existing Line-15 for the production of 30-nm class DDR3 DRAM, Samsung said.

Samsung said that expanding Line-15 will allow the company to increase the percentage of 30-nm-class DDR3 DRAM to more than 10% of its total production volume for electronic data processing DRAM by the end of the year.

Further, Samsung will also invest approximately 2 trillion won in its system LSI operations targeted at mobile handsets and digital TVs, and to strengthen its foundry business.

Expecting increasing demand for large-size LCD TV panels, Samsung's investment will also establish a new 8th-generation LCD line at its Tangjeong Complex in South Chungcheong Province. The 2.5 trillion won investment will allow for Samsung's Line 8-2 Phase 2 facility to have a capacity of 70,000 panels per month.

Together with earlier announced LCD investments, construction of Samsung's fourth 8th-generation LCD line will increase investment in LCD facilities for 2010 to a total of 5 trillion won, the company said.