Samsung Electronics will invest some $ 17.7 billion in its memory chip business, seeking to expand its market leadership in the global telephony market.

Samsung: the largest chip producer

The Pyeongtaek site, some 70 km from Seoul in South Korea, is the largest of its kind in the world in which Samsung has already invested $ 14 billion over the past two years to build it. Production has recently started.

The South Korean group is also planning to expand the NAND chip production plant in China in Xian City to meet the high demand for chips with tremendous storage capacity.

However, it did not provide any details on the timing and result of this Investment. In the phone sector, Samsung is both challenged by Chinese manufacturers on entry and mid-range products, and by the iPhone of its primary rival Apple in the high-end.

The reliability of the South Korean group was also shaken by the fiasco of the Galaxy Note 7 whose generation was stopped in October after a call-back operation, as some units had caught fire. However, Samsung Electronics managed to record its largest quarterly net profit for more than three years. In the first three months of the year, net profit was $ 6.65 billion, with the very high demand for chips compensating for the failure of the Galaxy Note 7.

The South Korean tech giant, which held more than 40 percent of the global memory chip market in the first quarter, sells its chips to other companies, including Apple.

Growing demand for high-tech gadgets

Samsung customers are struggling to secure enough semiconductor chips due to the growing demand for high-tech gadgets. Samsung plans to actively respond to these requirements by making reactive investments on their production lines in Korea and abroad.

According to analysts, the shortage of chips is expected to continue throughout this year, causing a rise in prices, beneficial to large producers in the sector, including Samsung or its national competitor SK Hynix. The average price for DRAM chips, used in servers and computers, could rise by 53 percent in 2017, and NAND Flash chips in mobile phones by 28 percent.

The Samsung announcement comes as South Korea's new president Moon Jae-In has recently made the fight against rising unemployment in the country its top priority. The group has estimated that its investments will help create some 440,000 direct and indirect jobs by 2021.

The image of Samsung Electronics had also suffered at the beginning of the year from the imprisonment of its vice-president Lee Jae-Yong, the beneficiary of the group, and several executives for their involvement in the thunderous scandal of corruption that accelerated the dismissal of South Korean ex-president Park Geun-Hye.
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