HomeTech NewsSamsung to borrow display sector capital to help chips area

Samsung to borrow display sector capital to help chips area

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With the geopolitical scenario still boiling because of the war in Ukraine and with Samsung having a very negative last quarter, the worst in eight years, a new situation is established in the South Korean company.

According to The Investor portal, big tech plans to borrow 20 trillion won (almost R$ 83 billion) of its displays unit, Samsung Display, to secure working capital for Samsung Electronics, as the technology giant seeks to maintain a similar level of investment as last year, despite the sharp industry slowdown.

In a regulatory filing on Tuesday, Samsung said it will borrow funds from Samsung Display at an interest rate of 4.6%, with the loan due on Aug. 17, 2025. Samsung Display reportedly has all that money in reserve funds.

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The move comes as the world’s largest maker of memory chips and smartphones decided to maintain its investment in chips this year, despite the severe recession in the industry that led to a drop in its profits in the fourth quarter of last year.

As chip demand and prices plummeted in the second half of last year, the maker saw its operating profit from its semiconductor business fall 97% to 270 billion won, around R$1.1 billionfrom October to December.

In parallel, the South Korean chip industry last year spent its highest amount of 53.1 trillion won – about R$ 22 billion – on infrastructure, and 90% of the money was channeled into its semiconductor business.

Despite its poor performance, Samsung pointed out in the conference call on the results of the last quarter: “To guarantee the best quality and optimal operation of the production lines, we will reinforce the maintenance and adjust the equipment and continuously seek a smooth transition to the cutting we cutting edge for the future.”

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