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November 04, 2016

Samsung to Invest Billions in System Chips Production

Still reeling from the fiasco of its exploding Galaxy Note phones, Samsung has had to play damage control with the smartphone side of its business. It now must face a potential backlash of consumer mistrust and rebuild the image of its brand as a capable hardware developer, both in communications and other markets.

This setback, however damaging it may appear and continue to be, has not hindered the company’s plans to invest billions into its production of systems chips at several facilities in Austin, Texas. In a recent announcement, Samsung said it would place more than $1 billion into such production by June 2017 and that, of its $24 billion in annual capital expenditure, nearly half of that spent in 2016 went to semiconductor-related operations.

A report on the matter at Reuters noted that Samsung takes in a majority of its global profits through the sale of systems chips. It sits only behind Intel as a premier chip manufacturer with regard to volume, and its presence clearly extends to a large part of the globe. The single collection of Texas facilities shows that Samsung also has a strong interest in manufacturing products in North America to help support sales of its products to many other regions.

The company’s profits, though somewhat damaged from the fallout of the Galaxy Note, which has been permanently recalled, may also receive a boost from its continuing partnerships with large players such as Qualcomm, a microprocessor developer, and Nvidia, which is known for its graphics cards. Samsung has the opportunity to extend the sales of its own Exynos mobile microprocessor and gain expertise in fields related to the chip manufacture for which it has become well known.

No matter the type of market into which it reaches, Samsung will have an uphill battle from here. Like TMC has noted, a global recall of any product leaves brands in an unfavorable light, especially when the recall includes devices that could have caused serious physical harm to consumers. Samsung will have to rebuild its trust as a reliable manufacturer of every product its name touches. Its investment in system chips may take it far with other businesses. As consumers, though, readers of these pages will primarily look to Samsung’s face as a mobile device maker, and that could tell a far different story than the business-to-business background may show behind the scenes.

Edited by Alicia Young

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