Samsung Invests In Austin
August 21, 2012

Samsung Dedicates Almost $4 Billion For Their Austin, Texas Factory

Michael Harper for — Your Universe Online

Samsung, the largest maker of memory chips, has announced their intention to invest nearly $4 billion in their Texas factory as demand for smartphone and tablet processors continues to increase.

Samsung announced this move in a statement today, saying this investment will help convert the factory from a memory chip maker to a logic boards and processor maker. Samsung hopes this conversion will be complete by the second half of 2013.

This announcement marks a shift for Samsung as they move away from focusing on making memory chips used in many devices, including Apple´s iPad and iPhone. Now, rather than create the memory used for these devices, Samsung intends to focus their energy on making the brains of these devices, a more lucrative business for the company. Their partnership with Apple has helped increase their popularity and, as such, they feel the time is right to begin offering more involved and sophisticated pieces of silicon to their customers all over the world.

“It´s the right move to concentrate on the non-memory business because it´s much more profitable,” said Choi Do Yeon, an LIG Investment and Securities Co analyst, speaking to Bloomberg.

“The market for mobile application-processors is getting big, and Samsung is having a hard time keeping up with demand. They need extra capacity.”

This $4 Billion Investment in Austin – the only Samsung manufacturer in the US – is just one part of their $13 billion investment in semiconductors this year overall.

To test the plant, Samsung added a new production line last October which was dedicated to logic chips. Obviously, they liked what they saw, and have now announced what will be the largest investment made by a foreign company in the state of Texas. Since 1996, Samsung has already invested $13 billion, according to Samsung´s statement. Nearly 2,500 construction workers and vendors will be hired to complete this new project.

Though Samsung stock has risen by 21% so far this year, the price had fallen by 0.1% in the hours just before this announcement. Overall, Samsung stock has seen 3 years of consecutive gains, thanks in part to Apple´s iPad and iPhone success.

According to Choi, this newly expanded Austin branch could be used to create processors for future Apple devices. As Samsung´s largest customer, Apple could rack up a $7.5 billion tab to Samsung this year, according to a Bloomberg estimate. This represents a 60% increase over last year´s bill. During this year´s All Things D Conference, Tim Cook even mentioned that “the engine” of iPads and iPhones are made in Austin, Texas, though he did not specifically mention Samsung.

This sort of dependence on one another is quite different from their legal squabbles, which have recently been taking place in a San Jose, California court room. Though Apple and Samsung have been working together since before the first iPhone ever carried flash memory from Samsung, they are now at war with one another as they both accuse each other of copying designs and infringing patents. After a long, three week trial, lawyers for each side are expected make their final arguments today.