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Samsung takes spotlight off burning phones with $1bn chip investment

Level 3 is spending $6.7bn on the deal

If ever there was a need for a company to generate some positive headlines it is Samsung. The team has recently announced plans to invest $1 billion in its Austin, Texas, semiconductor factory during the first half of 2017.

Although its smartphone business has been tearing chunks out of profits in recent months, the semiconductor unit is a bright spot as the industry ramps up chip production to meet demand for mobile and other electronic devices. Maybe this is where the Samsung PR team can gain a quick win for the beaten and battered reputation.

Details for the investment were not exactly in-depth, though the business has been looking to expand its presence in the chip market. Historically successes have come from memory chip sales, though it has been expanding its Exynos mobile processors, as well as contract manufacturing deals.

It’s been a couple of weeks to forget. The exec team estimates the fallout from the Note7 withdrawal will cost the company more than $5.3 billion, the most recent earnings call saw the team report the lowest operating profit in two years and a humour/PR fail after it failed to see the funny side of a Grand Theft Auto V mod which allowed users to use the Galaxy Note7 as a weapon. The team are seriously in need of some positive headlines.

That is what the latest announcement appears to be; a means to generate good news for the under fire tech giant.

To be fair, the semiconductor business is a success story. It’s 3D NAND flash memory chips, used in computer and mobile phone storage, are considered to be world leading, and the unit accounted for 84% of the company’s overall operating profit during its last quarterly announcement. This is mainly due to the car-crash that is the mobile phone business, but it’s still good going.

The team has gone heavy on sentiment and the feel-good factor during the announcement. This isn’t a $1 billion investment to make money for the company, it’s to help the city of Austin of course, because that’s the sort of people who are running Samsung.

“We are committed to Austin and our contributions to the community,” said Catherine Morse, Senior Director of Public Affairs at Samsung Austin Semiconductor (SAS). “This is our home and we want to ensure our community is healthy and prospering. These investments will support this, while also ensuring our customers’ growing needs are met.”

A Samsung Galaxy Note7 may blow a hole in your table, but the team is doing its best to be responsible corporate citizens in Austin.

The company also quoted an Impact Data Source Economic Impact Study which claims SAS added $3.6 billion into the regional economy of central Texas in 2015, supporting 10,755 jobs in the area and $498 million in annual salaries. The report was not actually referenced or hyperlinked in the press release, though pessimists could assume it was commissioned by someone in Samsung.

“Samsung is a bellwether for Austin. As a company that the community and state partnered with to relocate here several years ago, they have far exceeded expectations,” said Mike Rollins, President of the Austin Chamber of Commerce. “Samsung remains a shining example of what happens when we create a business friendly environment.  The result is a win that enhances and sustains our community’s ability to create a broad range of new jobs and economic opportunities for Austinites and their families.”

While the news is hardly going to take the sting out of recent burns in the smartphone business, it is an opportunity for the PR team to divert attention. It may be a bit transparent, but Telecoms.com covered it, so it seems to have worked.

  • Samsung Electronics


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