Samsung expected to cut chip investment in half

South Korean chip manufacturing giant Samsung is expected to cut investments in memory chips by half, the media have reported on Thursday.

The decision has apparently been made because of the speedy ascend of cheaper Chinese suppliers, as well as the expected industry downturn.

Korea Times cited an analyst saying more than 50 per cent cut is expected: “We expect Samsung to cut its spending in dynamic random memory access (DRAM) chips by 51 percent this year from the $2.1 billion that it spent in 2015," said Amit Daryanani, an analyst at RBC Capital Markets, a global financial advisor, in a report to clients, Thursday.

"During the same timeframe, DRAM prices fell more than 50 percent due to weak PC demand. This year's estimated DRAM spending is at a level that is similar to what Samsung spent in the 2011 and 2013 down cycles," the report said.

One of the world’s biggest smartphone manufacturers will shift its focus onto thinner technology, which is both cheaper and more efficient.

It seems as the same fate will meet NAND flash chips, as well. Daryanani says that after the NAND capacity build is finished, Samsung will reduce its spending from $6.1 billion, to $2.8 billion, year-on-year.

"We believe that Samsung had a capacity of 90,000 to 100,000 3D NAND chips in the Xi'an plant by the end of 2015, with approximately 30,000 capacity at 48 layers and 60 to 70,000 at 32 layers. While we think Samsung will continue to invest in the leading-edge factory, we do not expect any significant 10-nanometer capacity ramp up until 2017. We are spending $3.3 billion building the new factory, with potential downside risks."