Lack of contract progress forced Samsung to postpone construction of a plant in South Korea

Initially, as SemiMedia notes, Samsung Electronics planned to develop its P4 production cluster in Pyeongtaek, South Korea, in four stages, alternating the construction of factories for the production of memory chips with contract production facilities. However, difficulties in attracting new customers in the latter area forced the company to reconsider its sequence.

Image Source: Samsung Electronics

At first, Samsung was going, as the source describes, to build the PH1 factory for the production of memory chips, then it was planned to build the PH2 factory, which would produce chips for third-party customers, the third would be the PH3 site for the production of memory, and would close the PH4 cycle, focused on contract manufacturing. Now, as SemiMedia notes, Samsung is not ready to begin construction of the PH2 enterprise for the needs of the contract business due to opportunistic considerations. It was unable to attract a sufficient number of orders for the production of chips under the contract, so priority was given to the construction of the PH3 plant, which will produce memory chips for its own needs. Samsung began building this part of the cluster last month.

In addition, from the point of view of organizing construction work, the sequential construction of two enterprises of the same profile is more convenient for Samsung, which is why “contract” projects are relegated to the background. According to TrendForce statistics, for the period from the third quarter of last year to the first quarter of the current year, Samsung’s revenue in the contract segment decreased by 9% to $3.36 billion. At the same time, the company’s share in the global contract manufacturing services market for chips decreased.