April 25, 2024

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[ET NEWS] Samsung Electronics said on Aug. 28 it will invest US$7 billion for the construction of a second NAND flash memory chip plant in Xian, China, over the next three years.

Industry sources said the latest investment plan could have been delayed due to the prolonged leadership vacuum at the nation’s largest conglomerate.

“A president-level business chief at Samsung’s memory chip unit can make an arbitrary decision on investments worth some 500 billion won (US$444 million) but they should get approval from the top brass for larger amounts,” an industry source told ET News. “The new investment for the Xian plant came later than expected.”

A Samsung official declined to relate the issue with the imprisonment of Vice Chairman Lee Jae-yong, saying the plan has long been considered. On Aug. 28, the 49-year-old Samsung heir filed an appeal against a five-year jail term he was given last week for bribery.

Samsung, the world’s largest memory chipmaker, had invested the same US$7 billion in the first Xian plant with a monthly production capacity of 100,000 wafers that is currently fully operated.

Samsung has reportedly continued investment talks for the second plant with the Chinese government since late last year when the first plant started full operations. Until July, when the company announced a whopping 21 trillion won investment for the brand-new Pyeongtaek complex in Korea by 2021, the company said it was still undecided on the investment in the new Xian plant.

“Samsung seems to under pressure and could not further delay the investment decision,” said another source. “The firm needs to beef up NAND production considering the severe supply shortage globally.”

In a separate regulatory filing on the day, Samsung announced five executives, including Lee, have been found guilty for their roles in the influence-peddling scandal involving the impeached former President Park Geun-hye and her close aide Choi Soon-sil.

By Han Ju-yeop (powerusr@etnews.com) (jylee@heraldcorp.com)
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