Samsung Electronics plans on spending $14.7 billion on a new chip facility, hoping its semiconductor business will bolster profits as its smartphone dominance declines.
The move marks Samsung's biggest investment in a single plant ever, according to Reuters.
The world's top chip maker said the plant will be located in Pyeongtaek, around 47 miles south of Seoul. It is expected to create 150,000 jobs, equal to about a third of the city's population.
April-June operating profit for Samsung's mobile division dropped in annual terms for the second straight quarter.
Higher demand for mobile devices comes increased orders for mobile chips, and Samsung Electronics' semiconductor division will be key to "propping up the company's bottom-line," analysts said, according to Reuters.
The plant will either make memory or logic chips, the company added. The final decision has not been made yet.
"Right now the only part of the company that is bringing in steady profits is the semiconductor division, so it looks like the company will keep investing in the business," said IM Investment analyst Lee Min-hee, according to Reuters.
The chip business could be the only bright spot in what is expected to be a disappointing third quarter for the South Korean company. Samsung will issue its earnings guidance for the period on Oct. 7.
The forecast from a Thomson Reuters survey of 42 analysts said the firm's July-Sept. operating project will fall in at around 5.6 trillion won ($5.24 billion), its weakest performance since the fourth quarter of 2011.
"While the plant won't enter production until 2017, Samsung's investment plan hurts sentiment because it suggests that Samsung wants to make further market share gains," IM's Lee said.
A number of analysts believe the semiconductor division will report stronger operating project than the handset division during the third quarter for the first time in three years.
The chip business recorded a 1.9 trillion won profit in the second quarter, compared with 4.4 trillion won for the mobile business, according to Reuters.
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