Samsung Electro-Mechanics (009150.KS) will invest a combined 6.78 trillion won ($4.9 billion) at its Sejong plant and in Vietnam to strengthen its position in the market for artificial intelligence chip substrates.
The company said its board approved 4.27 trillion won on the 28th to expand package substrate production facilities at the Sejong plant. It is the largest investment the company has ever made for a single product line. The amount equals 43.6% of its 9.7973 trillion won in shareholders' equity on a consolidated basis last year.
The Sejong investment runs from this month through May 31, 2028, with mass production set to begin in September 2028. Samsung Electro-Mechanics has designated the Sejong plant, its core domestic base for semiconductor substrates, as a production hub for high-value products, and announced an 8 trillion won investment plan in July this year.
A large investment will also go to Vietnam, one of its overseas production bases. The company will spend 2.51 trillion won through its Vietnamese production unit to build additional package substrate facilities on the site of its existing plant. That investment is scheduled for completion by the end of April 2028.
Together, the Sejong and Vietnam investments total 6.78 trillion won. Samsung Electro-Mechanics plans to expand capacity at home and abroad simultaneously to meet demands from global customers for larger supply volumes over the medium and long term.
Behind the spending is a surge in demand for high-performance chips driven by the spread of generative AI. As the AI chip market grows, demand is rising quickly for flip-chip ball grid array, or FC-BGA, substrates used in AI accelerators and server central processing units. FC-BGA is a high-density package substrate that connects high-performance chips to motherboards and carries electrical signals and power. It is used widely in server CPUs, AI accelerators, network equipment and automobiles.
The investment is being pursued on the basis of medium- to long-term cooperation with global big tech customers, according to sources. Those arrangements include customer funding support and guaranteed volumes over the medium and long term, and the company expects to expand facilities and improve its supply competitiveness on the back of stable demand.
Separately, a jump in sales of components for AI chips and servers is expected to sharply improve third-quarter results despite the recent decline in the won-dollar exchange rate. Brokerages' consensus estimate for third-quarter operating profit stands at 605.1 billion won, 2.3 times the 260.3 billion won posted a year earlier.
