Samsung Electronics Co is set to spend 15.6 trillion won (US$15 billion) building a chip plant in South Korea as it heads for the roughest quarterly result in years amid competition from Apple Inc and Xiaomi Corp (小米) smartphones.
Construction in Gyeonggi Province is set to begin in the first half of next year with semiconductor operations due to commence in 2017, Suwon-based Samsung said in a statement.
Samsung is shifting toward more complicated and lucrative processors to be the brains for new businesses such as wearable devices, smart cars and smart homes.
The biggest memory-chip maker is investing as its smartphone business struggles to stay dominant with Apple introducing the new bigger-screen iPhones 6 models and Xiaomi selling low-cost devices in more overseas markets.
Third-quarter operating profit, due to be released tomorrow, is projected to plunge 47 percent and sales might drop 15 percent in the steepest declines since at least 2009, according to analyst estimates.
The company may increase spending on the new plant after the initial investment, which is triple the amount Tesla Motors Inc might spend on its planned battery “gigafactory” in Nevada.
Profit at Samsung’s chip unit was 2.14 trillion won in the third quarter, according to a survey of analysts.
The increase from 2.06 trillion won a year earlier is partly due to Samsung supplying semiconductors for the new Apple iPhones.
Analysts have been cutting their profit estimates for Samsung almost daily, with at least 27 of 42 reducing their estimates in the past four weeks.
Samsung moved up the release date for its Galaxy Note 4 smartphone to the end of last month, meaning device sales will aid third-quarter results.
Apple’s iPhone 6 and 6 Plus have screens of 4.7 inches and 5.5 inches respectively, compared with 4 inches for previous models, and are comparable to the sizes of Samsung’s devices.
At the annual IFA consumer electronics show in Berlin on Sept. 3, Samsung said the Galaxy Note 4 would be released this month.
Apple introduced new iPhone models on Sept. 9 and the smartphones went on sale starting Sept. 19 in select markets.
The Cupertino, California-based company will start selling new iPhones in China on Friday next week after the government granted the smartphones a network access permit, the final step in the approval process.
The Note 4 is available through China Mobile Ltd (中國移動) for 5,199 yuan (US$847).
Samsung will start global sales of its 5.6-inch Note Edge in the fourth quarter, the company has said.
The Edge allows users to read messages, news and stock tickers from an angle by extending the display down the side of the phone.
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