The world’s largest semiconductor maker Samsung Electronics Co. said Tuesday it would have made its biggest-ever 46.2 trillion won ($41.2 billion) investment in production facilities this year, up 81.2 percent from last year, on top of paying out its most generous shareholder returns to date.

The Korean tech giant said in its regulatory filing on Tuesday that it would have spent 29.5 trillion won in producing semiconductors and 14.1 trillion won in displays this year.

The investment would mostly go into expanding its fab 1 line in Pyeongtaek to meet the growing demand for 3D vertical NAND and changing its DRAM facilities in line with the shift in the manufacturing process. Foundry production of 10-nano chips would also be ramped up.

In display, investment would be focused on expanding production lines for flexible organic light-emitting diode (OLED) displays to meet the burgeoning demand for flexible panels.

Most of the investment in the fourth quarter would go into semiconductors, primarily in securing new sites and semiconductor cleanrooms, said a company official.

Samsung Electronics also confirmed that it had posted its largest-ever quarterly earnings in the third quarter, led by strong demand for high-performance memory chips for servers and its flagship smartphones.

Operating profit for the quarter ended September was 14.5 trillion won, jumping threefold on year and up 3.3 percent on quarter. Sales reached 62.1 trillion won, up 30 percent on year and 2 percent on quarter.

As of 10:50 a.m. Tuesday, shares of Samsung Electronics were up 0.19 percent at 2,707,000 won.

The stellar results were mainly driven by the semiconductor division, which posted 9.96 trillion won in operating profit on sales of 19.9 trillion won in the third quarter. The memory unit’s strong earnings were led by high seasonal demand and growing appetite for higher density chips. The company expects demand for high-performance NAND and DRAM to further increase as the need for larger data capacity in servers and mobile devices grows with the development of big data and artificial intelligence.

It gave an upbeat forecast as NAND supply conditions are expected to remain tight in the fourth quarter and throughout next year along with increased SSD applications. It will respond by ramping up V-NAND supply and accelerating the transition to fifth generation.

The display panel business earned 0.97 trillion won in operating profit on sales of 8.28 trillion won. While revenue gained on new smartphone launches, earnings declined due to increased costs for new OLED production lines and decreased average selling price for LCD panels. The company expects increased shipments of flexible OLED displays and the release of new rigid OLED panels to improve earnings in the fourth quarter. But the LCD business is likely to be met with weak seasonality and expanded supply.

It predicted OLED to become a mainstream in supporting high-end phones, which can help the front-runner in small- and mid-sized OLED panels.

The mobile division saw smartphone shipments increase thanks to the release of the new Galaxy Note 8 and Galaxy J series. But operating profit fell to 3.29 trillion won from 4.06 trillion won in the previous quarter due to higher sales of mid- to lower-tier models. The company predicts solid earnings in the fourth quarter during the year-end peak season but was uncertain about profitability due to intensified competition in the premium segment.

The consumer electronics division posted 0.44 trillion won in operating profit on sales of 11.1 trillion won. On-quarter profits in the TV business improved thanks to increased sales of premium QLED TVs. But on-year earnings were lower due to the higher cost of LCD TV panels and weakening demand. Samsung plans to focus on driving sales through premium products, including QLED and ultra-large screen TVs, and reinforcing B2B growth through digital signage and cinema LED businesses.

By Kim Dong-eun and Kim Hyo-jin

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