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S. Korean electronic firms stick to 2020 plans

/ 05:58 PM April 19, 2020

Samsung Electronics’ Xian plant for semiconductor manufacturing. The Korea Herald/Asia News Network

SEOUL — The South Korean electronics sector is continuing to push through its original plans of business investment and expansion for 2020 despite the uncertainty cast by the COVID-19 pandemic.

According to industry sources Sunday, the Korean electronics companies spanning batteries, displays and semiconductors are showing no signs of drawing back from their overseas plant construction timelines.

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On the semiconductors frontier, Samsung Electronics is aided by the Foreign Affairs Ministry as it talks with the Chinese government to dispatch semiconductor engineers there to expand its second Xian plant. Since the COVID-19 outbreak, China has barred foreigners’ entry if not for special circumstances.

At the plant in Xian, China, Samsung is manufacturing NAND flash memory chips for smartphones, personalized computers and servers.

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In 2017, Samsung Electronics said it would invest $7 billion won to build the second plant, and said at end-2019 that it will invest an additional $8 billion won to grow the facility.

Samsung Electronics began operation of the second Xian plant in March as previously announced, and plans to fully operate the plant by August.

Its renewed manufacturing lines in Pyeongtaek, Gyeonggi Province, will also continue as planned, local reports suggested.

SK hynix is also planning to complete construction of its M16 plant in Icheon, Gyeonggi Province, in the latter half of this year while SK hynix System Ic has a similar timeline for the completion of its foundry factory construction in Wuxi, Jiangsu province.

Local reports say that Samsung’s second Xian plant and SK hynix’s Wuxi plant had had some three weeks’ delay in setting down facilities, but no long-term plans were changed. The companies are not likely to make aggressive investments in light of the pandemic, but would guardedly go through with proposed expansions.

In the battery sector, LG Chem and SK Innovation are sending specially chartered flights to Poland and Hungary, respectively, to dispatch engineers for factory operations under the local governments’ travel authorization amid the global pandemic.

SK Innovation sent some 300 employees to Komarom, Hungary, to help with the expansion of the second plant. SK Innovation has invested some 945.2 billion won ($777 million) to build the plant, which it wishes to begin a test run in the first half of 2020 and start full-fledged production from 2022. The company has not modified the projected dateline in the face of COVID-19.

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When the second plant is completed, SK Innovation will have increased its annual output from Hungary plants from 7.5GWh from the first plant to a combined 16.5GWh.

SK Innovation is also carrying through on the plan to build a second plant in Yancheng, in China’s Jiangsu province, with a deadline set for the second half of 2020. Its North American plant in Georgia is projected to finish the first stage of construction by the second half of 2021.

The company is reportedly reexamining when to start the second stage of construction, depending on the outcome of an ongoing legal suit with LG Chem, and whether the slump in the petrochemicals market improves.

LG Chem is also adding ammunition to its Europe base. The battery firm has sent some 200 technicians to its plant in Wroclaw, Poland, where they have acquired a special grant to forego two-week self-quarantine. As a condition, these technicians were examined and tested negative for COVID-19 prior to boarding the plane to Poland.

LG Chem plans to double the output from its Poland facility. Once the expansion is done, the company will have capacity to make 70GWh of batteries a year at its Polish facility, enough to equip 1 million EVs.

The company is also expected to push through with its plan to start plant construction in Ohio in mid-2020, as its venture partner General Motors tries to keep pace with electric vehicle maker Tesla.

In China, where it was planning to start a venture with local carmaker Geely, however, LG Chem was unable to move forward with choosing a location for the factory, due to limited business trip opportunities to China amid the pandemic.

As for Samsung SDI, the battery maker affiliate of Samsung Electronics, the company will watch the situation for the time being. Samsung SDI also has a plant in God, Hungary.

As for the display sector, both LG Display and Samsung Display are adamant to ensure their workflow is minimally affected by COVID-19.

In March, LG Display sent some 290 employees to its organic light-emitting diode display panel plant in Guangzhou, China, to hasten operations there.

Samsung Display sent some 300 engineers as well to its OLED module plant in Vietnam, to renovate facilities there.

Reports say that Samsung Display cannot slow down in the face of the pandemic as it recently committed to its decision to completely halt its liquid crystal display business and instead focus on quantum-dot displays.

If the COVID-19 pandemic does not subside through the latter half of 2020, the increased uncertainty and financial strain may prompt the companies to inevitably shift their investment plans and strategies, industry experts opined.

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