Semiconductor chips and displays are core sectors for Samsung and for South Korea as a whole. Photo: AFP/Jung Yeon-je

Samsung Electronics plans to invest 133 trillion won (US$116 billion) in a “logic” chip to power automated cars and AI-inspired technology.

The South Korean giant and rivals such as Taiwan’s TSMC, United States-based Qualcomm and Intel are in a race to produce powerful chips to support super-fast 5G networks, high-tech cars and the robotic factories of the future.

“The investment plan is expected to help the company to reach its goal of becoming the world leader in not only memory semiconductors but also logic chips by 2030,” it said in a statement, referring to the $9.57 billion annual investment through to 2030.

Samsung already injects more than $20 billion-a-year into its chip operation.

Last year, the group spent $26 billion in capital expenditure with most of the cash going to the semiconductor division.

At least 96% of the company’s operating profits are generated by memory chips.

“Samsung appears to be aggressive on the non-memory side given the size of the spending, but it is too early to tell whether this long-term plan will work out because it depends a lot on the demand situation and market conditions,” Song Myung-sup, a senior analyst at HI Investment & Securities, told Reuters.

Still, the decision to push into the AI marketplace comes as no surprise.

Samsung’s smartphone business, once the biggest generator of profits, has struggled with China’s tech titan Huawei cutting into its market share.

“It’s rare for Samsung to detail such a long-term plan,” Yoo Jong-woo, an analyst at Korea Investment & Securities, told Bloomberg. “It’s an expression of Samsung’s commitment in a chip business that includes not only Intel but also a variety of chipmakers, such as in mobile processors.”

Shares in Samsung closed down 1% on Wednesday, broadly in line with the wider market’s 0.9% fall.

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