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Samsung Seeks $3.6 Billion Loan to Boost Chip Production

Low-interest loans from the Korea Development Bank to support semiconductor expansion
South Korea
s 005930.KO Blue Chip 150 OM 60 Semicon 75 Tech 350
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Samsung Electronics Co., the world’s largest memory chipmaker, is in the final stages of negotiating a loan of up to 5 trillion won ($3.6 billion) from the state-run Korea Development Bank (KDB), The Korea Economic Daily reported The funding is part of a broader 17 trillion won government initiative to bolster the domestic semiconductor industry with low-interest loans starting next month.

Samsung plans to use the funds to enhance its chip production capabilities both in South Korea and internationally. This marks a significant shift in Samsung’s financial strategy, as the company has traditionally operated without borrowing. The move comes amidst fierce competition with Taiwan Semiconductor Manufacturing Co. (TSMC) and a booming demand for artificial intelligence (AI) chips.

In addition to the KDB loan, Samsung is exploring the issuance of corporate bonds domestically and globally, having recently engaged with Korean and foreign brokerage firms. The company last issued domestic corporate bonds in 2001 and raised $1 billion in global bonds in 2012.

The push for additional funding is driven by the need to sustain heavy investments. Samsung’s cash reserves have decreased significantly from 121.8 trillion won in 2020 to 91.7 trillion won at the end of 2023, amid substantial spending on facility investments and research and development.

With the anticipated KDB funds, Samsung aims to advance its state-of-the-art chip facilities in Pyeongtaek, Gyeonggi Province, and Taylor, Texas, among other locations, to maintain its competitive edge in the global semiconductor market.

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