Samsung To Invest Billions Of Dollars In Chip Development And Biotech Business

Over the next three years, the South Korean multinational electronics company Samsung wants to raise spending by a third to more than $205 billion, as it targets chip manufacturing leadership and a larger position in Covid-19 vaccine production.

Samsung on 24 August announced that it would spend 240 trillion won on capital expenditures and R&D over the next three years, up from 180 trillion won in the previous three, reported The Wall Street Journal.

Samsung's de facto leader, Lee Jae-yong, was released from prison earlier this month, which boosted expectations for the business to make some bolder moves. Lee's supporters claim that Samsung failed to make major strategic decisions and postponed investments as competitors forged forward in the face of a global chip scarcity that has thrust semiconductors to the forefront of national agendas.

The location of a planned $17 billion Samsung semiconductor factory in the United States is one critical decision that needed Lee’s approval. Since at least January, the company has been considering locations in Texas, New York, and Arizona. However, the facility will be a significant component of the South Korean company's ambition to compete in the foundry market, which produces chips for companies that design them on a contract basis.

The foundry market is now dominated by Taiwan Semiconductor Manufacturing Co., and Samsung is facing fresh competition from Intel Corp., which recently revealed plans to return to creating chips for others.

Meanwhile, in India, Tata Group announced that it is considering entering the semiconductor business, while the Indian government also expressed the willingness to establish a semiconductor sector in the country. Union Commerce and Industry Minister Piyush Goyal recently said: “There is a worldwide shortage of semiconductors and the government is very much focused on bringing the semiconductor industry to India… the government is committed to supporting both these sectors."

However, over the next three years, the semiconductor industry dominator TSMC aims to invest $100 billion in additional chip capacity. Intel's anticipated spending is lower, though it is considering a $30 billion acquisition of GlobalFoundries Inc., according to people familiar with the matter.

This week, Samsung restated its intention to explore mergers and acquisitions to "solidify technology and market leadership". Samsung Electronics hasn't made a major acquisition in nearly four years, despite having more than $80 billion in cash. However, last month, it stated that the company will seek one within three years, mentioning artificial intelligence, 5G mobile networks and automotive technology as possible targets.

The South Korean conglomerate pledged to accelerate previously announced investments by Samsung Electronics in logic-chip technology and foundry expansion, as well as to 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 market conditions", reported WSJ.

The company will also aim to expand its contract medicine manufacturing and biosimilars development businesses, led by Samsung BioLogics Co. and Samsung Bioepis Co., respectively. As per the report, Samsung Biologics wants to develop two new factories with the newest investments, adding to three that are already operational and a fourth that is under construction, as it considers the business of manufacturing vaccines and cellular- and gene therapy products.

Samsung Biologics struck a deal with Moderna Inc. in May this year to deliver fill-and-finish packaging for hundreds of millions of doses of the Covid-19 vaccine. It is seeking to grow its drug-substance manufacturing capacity for messenger-RNA or mRNA vaccines, and industry observers believe that it will need to expand its partnership with the American company or forge new partnerships with other pharmaceutical firms to gain a stronger foothold in global vaccine production.

This week, Samsung also mentioned batteries as a potential investment target, and currently, according to a Samsung SDI spokesperson, the company is looking at a variety of locations in the US for battery production, including Illinois.