Samsung Electronics is one of the largest known brands for consumer-grade products. However, most are unaware of the South Korean tech giant’s actual size and scale of operations which also includes chip manufacturing processes for other smartphone OEMs. Now, the company is expected to further invest an extra $8 billion in its chipmaking factory in Xi’an, China.

According to a new report, Samsung will increase the investment in the Chinese chip factory to boost the production of NAND flash memory chips. It is speculated that the large investment follows after the company predicts a surge in demand for memory to rebound next year due to limited supplies alongside rising demands for fifth-generation networks and devices.

Currently, Samsung is the world’s largest producer of NAND flash memory chips which are capable of holding data indefinitely and are found in smartphones, USB pen drives, and various types of memory cards. Back in 2017, the company was to invest $7 billion over the course of three years in its Xi’an plant that produces such NAND flash memory chips. This investment followed a $10.8 billion which Samsung had already invested earlier for a testing and packaging plant in Xi’an.

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Samsung’s dominance in the NAND flash memory market is evident with many competitors still seeking to rival the South Korean giant. However, none have been as successful in the overseas market as Samsung has. Known competitors include South Korea’s SK Hynix, US-based Micron Technology Inc, and Toshiba Corp group.

The new investment raise from Samsung indicates of the ever-growing smartphone industry. Furthermore, new generation devices with faster memory and processing are expected to make a breakthrough in the market in the near future as well. Thus, Samsung has already started preparing with a large extra investment. Notably, examples of other areas that are expected to be hit with high demand in 2020 include the camera lens module of smartphones.

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Smartphone storage chip prices have soared quickly in the past 18 months and it is now being reported that Chinese regulator is keeping a close watch on the companies who are responsible for making these chips. The South Korean companies, Samsung, and HK Hynix are the top two manufacturers of memory chips for smartphones. It is said that China’s National Development and Reform Commision (NDRC) has spoken to Samsung regarding this price surge.

China Daily reports that NDRC could be looking at a possible price fixing strategy by these companies to maximize their profits. The supply of memory chips have been tight in the past few months, but their demand has been increasing, thanks to fast-growing companies like Xiaomi and OPPO. But the shortage of memory chips isn’t something that’s very recent. Remember how Huawei used a mix of eMMC and UFS memory chips in its P10 flagship because of a serious shortage of flash memory chips in the supply chain? So, Huawei’s case isn’t an isolated issue as other companies have also struggled to ensure timely supply of memory chips. For example, a few months back, Reuters published a report stating clients have started accepting long term 6 month supply contracts instead of the traditional quarterly or monthly ones to ensure they have enough supply of memory chips. Even the prices for these chips have risen rapidly in the past few months.

If the regulators come to a conclusion that this is a case of price fixing, it could impose penalties and fines on these companies. Given that foreign (South Korean) firms still hold the technology for making premium 3D NAND chips, it becomes necessary for the Chinese government to take care of the increasing prices to ensure this is not hurting the interest of the domestic smartphone manufacturers.

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