Samsung says it might raise equipment spending

Samsung Electronics Co may raise spending on new equipment this year to increase production as the biggest maker of computer-memory chips braces for a revival in demand for semiconductors, spokesman James Chung said.

Like other chipmakers, Samsung is deciding when to invest in new production facilities based on 12-inch silicon wafers, from which chips are cut and packaged. Most chipmakers now get their chips from 8-inch wafers.

Samsung's plan to boost spending follows Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the biggest maker of chips for other companies, which last month said it will increase investment this year to meet better-than-expected demand. Some investors say Samsung needs new production technology that helps cut costs.

"Samsung will have to invest soon to maintain its lead," said Devan Kaloo, who counts Samsung shares among the US$3.5 billion he helps manage at Aberdeen Asset Management Ltd in Singapore.

Reports in South Korean newspapers said Samsung will increase spending by 1 trillion won (US$752 million) are speculation, Chung said.

Signs that chipmakers are beginning to consider new spending come as chip demand begins to show nascent signs of a recovery.

Worldwide computer-chip sales fell 35 percent in February, declining at their slowest pace since June, the San Jose, California-based Semiconductor Industry Association said last month.

Chipmakers expect to cut production costs by almost a third from using 12-inch wafers, which double the number of chips that can be cut from a single piece of silicon. Factories that use the newer production technology costs as much as US$3.5 billion, twice as much as factories that use older technology.

In Taiwan, TSMC and United Microelectronics Corp (聯電), its nearest rival, are among a handful of companies around the world that are already investing in 12-inch plants.

TSMC last month said it will boost spending this year to US$2.6 billion.