SEOUL - Samsung Electronics is set to almost double its capital investments, mainly in the semiconductor business, to meet rising demand for memory chips and exploit the "super cycle" in the sector, the company said Tuesday.
Samsung said its investment will reach 46.2 trillion won this year, up from 25.5 trillion won ($41 billion) from a year ago. By sector, the semiconductor business will draw the most investment with 29.5 trillion won, followed by the display business with 14.1 trillion won.
"For memory, we are expanding the Pyeongtaek 1 production line to meet rising V-NAND demand," the company said. "We are also investing in 10-nano foundry production lines."
The company's newest chip factory is in the western South Korean city of Pyeongtaek, and the focus of the heavy investment is on its fourth-generation V-NAND chip.
"We will invest in semiconductors with a long-term strategy," said Lee Myung-jin, head of Samsung Electronics' IR group during a teleconference on Tuesday. "We are not just expecting high growth for next year. We are looking beyond this, considering two to three years," he added.
The announcement comes as strong semiconductor performance helped the company post record earnings in the third quarter, offsetting dwindling profits from the consumer electronics department.
South Korea's largest company said operating profit reached 14.53 trillion won in the July-September period, up 179.48% from 5.2 trillion won a year ago. Sales jumped 29.77% to 62.05 trillion won during the same period, with net profit attributable to shareholders soaring 150.40% to 11.03 trillion won.
The company also announced its dividend policy for the next three years. It will increase its dividend by 20% to 4.8 trillion won this year from a year ago. In 2018, it will double the dividend to 9.6 trillion, and maintain that level in 2019 and 2020.
By sector, the semiconductor business contributed the most to earnings, with its operating profit almost tripling to 9.96 trillion won from 3.37 trillion won a year earlier. That was a contrast to its consumer electronics division, where operating profit dropped by 340 billion won to 440 billion won during the same period. Operating profit at the mobile business reached 3.29 trillion won, up from 100 billion a year ago when it was slammed by the termination of the Galaxy Note 7 smartphone.
"Demand for memory chips has risen continuously on the back of data centers and new smartphone products," the company said in a statement. "We expect tight supply will continue in the fourth quarter and next year, as chip capacity is expanding further."