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Samsung Puts High Hopes on Chips, Components Units

Samsung’s foundry business would look for new clients in China, where it expects high market growth, and focus on increasing supply capacity


South Korea's Samsung Electronics on Thursday reported a 12% rise in quarterly profit due mainly to demand for high-margin memory chips.
A strong dollar, which hit a 20-year high, also aided chip profits, boosting Samsung's operating profit by about 1.3 trillion won versus the prior quarter. File photo: Reuters.

 

Samsung Electronics expects its chip and components division to perform strongly this year as it looks to boost supply by improving operations in a tight global market, the company’s new co-chief executive said on Wednesday.

The chip and components business is expected to outperform the global chip market’s forecast annual growth of 9%, division head Kyung Kye-hyun told the annual shareholders meeting, without giving further details.

Kyung said Samsung’s foundry business would look for new clients in China, where it expects high market growth, and focus on increasing supply capacity by improving operations at its plants.

The tech giant will also improve its responsiveness in producing made-to-order chips in growth fields such as high-performance computing and artificial intelligence, he said.

Responding to a shareholder question about low yields for the foundry business’s cutting-edge, 5-nanometre or less chips, Kyung said the initial ramp-up took time but operations are showing a gradual improvement.

“As the process becomes finer, the complexity increases, and processes concerning 5-nanometres or less (chips) are approaching the physical limit of semiconductor devices,” he said.

Samsung aims to improve both profitability and supply by optimising line operations and continuously improving processes already in mass production, he added.

A global tightness in chips and components supply, due to limited production capacity coupled with a boom in demand for chips used in everything from smartphones to cars, is driving investments by governments and chipmakers.

However, new production lines being planned now won’t come online for several years.

 

  • Reuters, with additional editing by George Russell

 

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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