Samsung Electronics, the world’s largest memory chip maker, will invest $16 billion (Rs 73,000 crore) this year to boost output of chips and flat screens, turning up the heat on rivals with less cash to compete.
Citing a recovery in the global consumer electronics and IT industry markets, Samsung more than doubled its 2010 capex to 18 trillion won ($15.9 billion) from a previous guideline of 8.5 trillion won and last year’s 8 trillion won.
The increase in Samsung’s spending will be bad news for smaller rivals jostling to ride the recovery boom, as it will widen the technology gap with second-tier manufacturers.
“By announcing this huge amount of spending, I think Samsung aimed to discourage rivals from competing with it,” said Takeo Miyamoto, an analyst at Deutsche Securities in Tokyo.
“Samsung may be able to dominate the DRAM market with this spending. It’s very hard for Japan’s Elpida to keep up with Samsung. But in the NAND market, it is not easy to break away from Toshiba as the memory chip business requires not only money but sophisticated technologies.”
Samsung competes with local rival Hynix Semiconductor, Japan’s Elpida Memory and Micron Technology of the US in computer memory chips, and with LG Display and AU Optronics in flat screens.