Samsung Says Technology Trumps Rivalry in Market Goal

  • Chipmaker targeting expansion in logic to complement memory
  • Samsung opens new U.S. HQ in California to attract talent

Samsung Electronics Co., the world’s second-biggest chipmaker, wants to get bigger and is targeting an expansion in logic chips as part of its effort to add to its leading position in memory.

The company intends to sell more chips to other companies and won’t put the needs of Samsung divisions ahead of its potential external customers, said Kim Ki Nam, head of the company’s logic chip business. The South Korea-based chipmaker also is the world’s largest maker of smartphones, leading supplier of TVs and among the top suppliers of liquid-crystal displays and other components.

"We believe we have plenty of room to grow,” Kim said. “If you have a fab (plant) to operate it doesn’t matter whether your customer is internal or on the outside. Whoever buys our capacity is the primary customer.”

Samsung Thursday opened a new chip research-and-design center in Santa Clara, California. The 1 million square-foot building, close to the headquarters of companies such as Cisco Systems Inc. and Intel Corp., is aimed at keeping Samsung competitive with Silicon Valley companies in its ability to recruit engineering talent, Kim said.

Asia’s largest electronics maker has suffered declining sales over the past year and a half as its Galaxy line of mobile phones has lost share to Apple Inc.’s iPhone and face lower-priced competition from Chinese newcomers. Its chip business has countered that trend, increasing sales and profitability in part by supplanting Qualcomm Inc. products in its own phones and by contract manufacturing for Apple.

Samsung is the world’s biggest maker of memory chips, a market dominance that makes it the second-largest chip producer behind Intel Corp. Operating profit in the most recent quarter at Samsung’s semiconductor business, which makes memory chips, applications processors and camera sensors, was 3.4 trillion won ($3.1 billion), compared with 1.86 trillion won, a year earlier.

The shares fell 1.2 percent to close at 1,112,000 won in Seoul trading Friday. Samsung has dropped 16 percent this year, compared with a 1.4 percent gain on the benchmark Kospi index.

(Corrects spelling of executive's name in second paragraph.)
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