It is expected that next year’s investments in plant and equipment within the electronic industry in South Korea will be led by the display industry during the first half and the semiconductor industry during the second half. South Korea’s display industry that has not made much investment this year is expected to resume its investments in plant and equipment starting from 2020.
Samsung Display will start it off with an investment into next-generation large displays during the first half. Investments into semiconductors such as DRAM, NAND flash memory, and foundry are also expected to take place on full-scale during the second half. Although $27.2 billion (32 trillion KRW) semiconductor investments and $12.7 billion (15 trillion KRW) display investments are estimated, there is a possibility that the amount of investments will increase depending on the status of the semiconductor market in 2020.
According to the semiconductor and the display industries, it is predicted that Samsung Electronics and SK Hynix will carry out $27.2 billion (32 trillion KRW) investments in plant and equipment in 2020.
It is estimated that Samsung Electronics will invest $19.5 billion (23 trillion KRW), which is similar to its investment in plant and equipment for this year, or slightly more. However, it is estimated that SK Hynix will invest about $7.64 billion (9 trillion KRW) that is slightly lower than its investment for this year. Although the semiconductor industry is not going through a super boom like it had in 2017 and 2018, semiconductor system manufacturers will be able to reap benefits from Samsung Electronics.
While Samsung Display and LG Display have invested about $7.64 billion (9 trillion KRW) this year, it is estimated that they will invest about $11.9 billion (14 trillion KRW) next year.
South Korea’s display industry will lead overall investments in plant and equipment during the first half of 2020.
Samsung Display is planning to execute a brand new investment in plant and equipment since two years ago. While it has yet to make any additional investment since it invested about $11 billion (13 trillion KRW) into A3 plant, which is Gen. 6 flexible OLED plant, it is planning to prepare necessary facilities and equipment for Gen. 8 QD (Quantum Dot) display starting from end of this year.
Samsung Display has invested $2.46 billion (2.9 trillion KRW) into display facilities this year. Its investment is basically an usual maintenance cost of facilities. However, it is planning to invest $11.1 billion (13.1 trillion KRW) starting from next year until 2025 to produce QD displays.
The display industry predicts that Samsung Display will invest about $8.49 billion (10 trillion KRW) in 2020 alone. It also predicts that Samsung Display will invest additional $8.49 billion in 2021 and that Samsung Display will invest huge amount of money that ranges between $17 billion (20 trillion KRW) and $25.5 billion (30 trillion KRW) just to mass-produce QD displays.
It is predicted that LG Display’s investment in 2020 will be lower than its investment for this year as LG Display has focused its investment on its 8.5-Gen OLED plant in Guangzhou and finishes up other major investments. It had invested about $6.80 billion (8 trillion KRW) in 2018 by investing into 8.5-Gen OLED plant in Guangzhou and 10.5-Gen (P1) plant in Paju. It is understood that LG Display has invested about $5.95 billion (7 trillion KRW) this year. It is predicted that it will invest about $3.40 billion (4 trillion KRW) in 2020 as it finishes up major investments and makes supplemental investments to recover its performance.
Investments in plant and equipment related to semiconductor will take place on full-scale during the second half. Many predict that conservative mood that is currently swinging within semiconductor device companies will be changed starting from the second half.
Majority within the industry predicts that the number of demands for semiconductor systems will gradually increase as the second half approaches if Samsung Electronics makes its investments into its new P1 and P2 facilities in Pyeongtaek and its new NAND flash memory plant in Xi’an starting from end of this year as arranged. Although it is difficult to materialize the size of entire investments in 2020, the semiconductor industry predicts that investments will take place more actively because the direction of the market becomes clear when the second half approaches.
The semiconductor industry predicts that the amount of Samsung Electronics’ investment in semiconductor plants and equipment in 2020 will be either similar to the amount of its investments this year or slightly higher. Samsung Electronics has invested $19.8 billion (23.3 trillion KRW) into semiconductor plants and equipment this year. It has been able to meet demands for memories by investing at least $17 billion (20 trillion KRW) for three years in a row.
South Korean semiconductor system manufacturers that have taken a huge blow due to lack of semiconductor demands are expecting to recover their performance in 2020. Some major semiconductor system manufacturers have set their performance in 2018, which was the highest of their companies’ histories, as the goal in 2020.
“It seems that Samsung Electronics will invest into its plants in Pyeongtaek and Xi’an as planned and that SK Hynix will reduce its investment in plant and equipment in 2020.” said Kim Yang-peng who is a researcher from Korea Institute for Industrial Economics & Trade. “Although both of them are expecting that the semiconductor market will recover in 2020, it seems that SK Hynix has no choice but to reduce its investment as the amount of its operating profit for this year has been greatly reduced.”
“We cannot predict the future yet as there are still uncertainties from foreign countries.” said CEO of a semiconductor system manufacturer. “We will be able to see an improvement in investments once the second half hits.”
Staff Reporter Bae, Okjin | withok@etnews.com & Staff Reporter Kang, Hyeryung | kang@etnews.com
