Samsung Electronics, the nation’s largest tech giant, is expected to reduce facility investment in its chip business in 2016 from a year ago, data showed Wednesday, just as rivals such as Intel do the opposite.

According to the data compiled by industry tracker TrendForce, Samsung Electronics is estimated to spend $11.5 billion on capital expenditure, such as spending on facilities. The figure is a 15 percent drop from $13.5 billion in 2015.

Samsung is the market leader in the global dynamic random access memory and NAND flash market.


Samsung’s move was expected, as industry sources had already forecast the tech giant would not push for the second-phase facility investment plan for its memory chip plant in Xian, China, this year.

The chip business has become Samsung’s most important profit source. The business soared to around 50 percent of the tech giant’s total operating profit in 2015 from 34.7 percent in 2014 .

Mobile phones’ share in Samsung Electronics’ operating profit tumbled almost 20 percent to 38.4 percent in the same period.

“The falling global demand for Samsung smartphones and growing competition from other chipmakers has affected continued expansion of the chip business,” said Song Myung-sup, a stock market analyst from HI Investment & Securities.

In contrast with Samsung, Intel Corp. is expected to spend $9.5 billion on facility investment in 2016, up 30 percent on-year, the industry tracker added. Intel currently stands as the top player in the overall chip industry.

Taiwan Semiconductor Manufacturing, the world’s largest foundry chipmaker, is also estimated to allocate $9.5 billion in capital expenditure, up 17 percent from a year earlier.

Industry watchers said Intel and TSMC’s efforts to expand investment are aimed at narrowing the gap with Samsung.

Despite the on-year decline, however, Samsung will still remain the leading investor in the chip segment.

“Samsung is going to rapidly branch out to other businesses this year since the outlook on the company’s smartphone business remains negative,” the TrendForce said, adding the company will give more weight to its semiconductor businesses.

By Seo Jee-yeon (jyseo@heraldcorp.com)