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Samsung looks to diversify with $116bn bet on logic chips

Memory market leader plans challenge to TSMC and Intel

Samsung unveils a 5G smartphone at a February event. The company seeks to lead the market for logic chips such as processors, which are expected to see rising demand as 5G technology takes off. (Photo courtesy of Samsung Electronics)

SEOUL/TAIPEI -- Samsung Electronics will invest 133 trillion won ($116 billion) by 2030 to strengthen its non-memory semiconductor businesses, aiming to gain an edge in a logic chip market expected to see increased demand in the 5G era.

The world's largest memory chip maker said on April 24 it plans to spend 60 trillion won on production infrastructure and 73 trillion won on research and development to strengthen the competitiveness of its system LSI and foundry operations. The system LSI business produces logic chips, a category that includes processors and networking chips.

Samsung reported 29.4 trillion won in capital investment and 18.6 trillion won in R&D spending last year, though it did not provide specific figures for its non-memory chip operations. Memory chips are believed to account for more than 80% of sales in its semiconductor division.

This big bet on processors will put Samsung in competition with Taiwan Semiconductor Manufacturing Co. and Intel, the only two other companies with the resources and expertise needed for advanced chip manufacturing. TSMC, the leading contract chipmaker and a key supplier for Apple and Huawei Technologies, controls more than half the market for mobile processors, while Intel has the edge in microprocessors for PCs and servers.

Samsung is looking for new growth drivers beyond its memory business amid an overall slump in the semiconductor market, which is forecast to shrink 3% this year. The company has been trying to attract orders for its foundry business from Apple and leading U.S. graphics processor company Nvidia.

Samsung previously made core processors for the iPhone along with TSMC, but the Taiwanese foundry has been Apple's sole supplier of the chips since 2016. TSMC also pulled some Qualcomm orders for modem chips and processors away from Samsung last year.

Both TSMC and Intel also have their eyes on the memory market, Samsung's traditional turf. Intel makes NAND flash memory chips, while TSMC is studying emerging memory technologies.

TSMC Chairman Mark Liu told the Nikkei Asian Review last September that his company would not rule out the possibility of buying a memory chip company, though it currently has no concrete plans to do so.

Liu said in his keynote address at industry event Semicon Taiwan that future semiconductor development will require more integration of processor, memory and other chips.

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