Samsung Electronics declared that they are going to invest KRW 26 trillion in their business. Would this huge investment be a smart decision Or a bad decision
Apparently Lee Kun Hee, Chairman of Samsung Electronics, believes increasing investment is the right choice to make at this time. He thinks that the global IT economy is booming no matter what. And the aggressive investments strengthen the power of the company and will help business create many jobs. The investment will be KRW 11 trillion (Memory 9 trillion, System LSI 2 trillion) for semiconductors, 5 trillion for LDG, 2.5 trillion for AM-OLED and 8 trillion for R&D. They also aim at a 10 percent increase on RAM production so that they can cope with the growing demand of D-RAM, high performance and lower power uses.
Following actions related to the declaration, about 3000 people for Samsung Electronics Semiconductor production technology and 4000 people for LCD are expected to be hired.
Experts report that it would be good for Samsung to mark their stand firmly and enhance Samsung's cost competitiveness. Also, it will be an opportunity to expand market share of new business (AM-OLED). However, some are concerned about the results that a huge investment would bring. Since other competitors will start investing and fight over prices, it could cause the chicken game again (It is an extreme heat of game theory which if either side does not compromise, then both sides would reach the end of the line). Hynix Semiconductor, the number 2 D-RAM munufactures, also announced that they are going to expand investment last year. But Hynix is dealing with an M&A problem at this time. Therefore, for Hynix a huge investment as Samsung is virtually impossible. In addition, semiconductor researchers anticipate that the investment of Samsung will inevitably damage newcomers.
According to recent market research, Samsung Electronics ranked first in the D-RAM Market with a 33.6 percent share in 2009, and in the NAND flash market (40.7 percent).
