Samsung Investing in New Chip Plants

Samsung Electronics Co. says it will spend $1.2 billion on semiconductor
factories in South Korea for memory chips.

Samsung, the world’s leading memory chip manufacturer, will produce memory
chips by processing 12-inch, or 300 mm, silicon wafers.

The 12-inch wafer technology yields more than twice as many chips as an
eight-inch wafer, which is the current standard for the industry. By moving
to the new technology, Samsung will simultaneously boost production and
lower its production costs.

While several other chipmakers have been hit hard this year, because of a
slide in demand for memory and other semiconductors, Samsung continues to be
profitable and is aiming to improve its efficiency, and profitability.

By the third quarter of 2003, Samsung says it plans to start mass production
of DRAM and flash memory chips, at the facilities for the $1.2 billion
factory expansion at chipmaking facilities south of Seoul.

German chipmaker Infineon Technologies AG and Taiwan’s Nanya Technologies
back in November said they will jointly build a similar wafer manufacturing
facility, similar to Samsung’s plans.

Samsung’s profitability in the chip market is anomaly. Samsung’s two main
competitors in the memory chip market are Micron Technology
and South Korea’s Hynix Semiconductor have been suffering large losses, both
have posted massive quarterly losses over the past two years. On Monday,
Hynix received some good news, when creditors approved a $4.08 billion debt
relief package. Micron is expected to object to the latest Hynix debt relief

Samsung, in the three months ending in September 2002, posted a 400 percent
increase in profits, helped in part from sales of camera phones. Samsung has
become the third leading mobile phone handset maker.

Questions remain about demand in 2003 for both semiconductors and mobile
phone handset markets. Chip sales fell by one third in 2001, but have
recovered to grow by an unspectacular 1.4 percent in 2002, according to research
firm Dataquest. Forecasts for 2003 predict growth of between 5 percent and 10 percent.

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