Jay Y. Lee, executive chairman of Samsung Electronics (005930.KS), is expected to meet Chinese President Xi Jinping in Beijing to discuss expanding semiconductor factory investment in China. Observers say Samsung Electronics may launch a major investment push at its Xi'an plant to boost production of NAND flash memory, for which global demand is surging amid the artificial intelligence (AI) boom.
According to industry and diplomatic sources on March 22, President Xi is scheduled to meet global CEOs who have arrived in China to attend the two-day China Development Forum (CDF) in Beijing starting that day. Attendees are reported to include Lee, SK hynix (000660.KS) President Kwak Noh-jung, Qualcomm CEO Cristiano Amon, Broadcom CEO Hock Tan, Volkswagen Chairman Oliver Blume, and Mercedes-Benz Chairman Ola Källenius.
President Xi is highly likely to ask the global CEOs to actively invest in China during the meeting. Last year, Xi created a "Meeting with International Business Community Representatives" event following the CDF, where he publicly expressed his willingness to support foreign investment, saying, "China will remain fertile ground for foreign investment for a long time to come."
This year's CDF is being held under the theme "China in the 15th Five-Year Plan: Co-creating High-Quality Development and New Opportunities," which leads observers to expect Xi will personally call for expanded investment in the Chinese market. China's economy has been sluggish enough that Beijing abandoned the 5% growth range and set this year's GDP growth target at 4.5–5%. Attracting foreign investment is critical to lifting the growth rate.
In fact, Ling Ji, a minister-level vice minister of China's Ministry of Commerce, met Samsung China Strategy Cooperation Office President Yang Jie on Feb. 28, ahead of the CDF forum, and said, "We hope Samsung will continue to put down roots in China and achieve even greater development." According to the Ministry of Commerce, Yang responded, "Samsung views China's development prospects very positively and will continue to watch for industrial development opportunities in China while actively expanding investment in China."
Given the widening points of contact with the Chinese government, the industry expects Lee is also highly likely to express his willingness to expand investment during his meeting with Xi. Samsung Electronics' commitment to expanding its China business is firm.
Lee met Xiaomi Chairman Lei Jun last year to personally discuss cooperation plans, and Samsung Electronics had been manufacturing AI chips for Huawei, a leader in China's autonomous driving solutions, until U.S. export controls were imposed.
Above all, observers say the Chinese government is expected to ask Samsung Electronics to make additional investments in its Xi'an plant, a NAND flash production base, given that U.S. semiconductor equipment export restrictions have been eased. The U.S. Department of Commerce's Bureau of Industry and Security (BIS) changed its policy to allow exports by approving annual equipment shipment volumes for Korean chipmakers' Chinese factories, instead of revoking their Validated End-User (VEU) status. This represents a lower level of restriction than the original plan that would have required Samsung Electronics to obtain U.S. approval each time it brought American-made equipment into its Chinese semiconductor factories.
Growing revenue from the Chinese market is also cited as a factor that could drive expanded investment. Despite Washington's stringent semiconductor export controls on China last year, Samsung Electronics' revenue from the Chinese market rose 7.7% year-on-year to 47.3148 trillion won ($34.7 billion).
This lends weight to the view that Samsung Electronics will increase investment in its Xi'an plant, a global NAND flash production base, and its Suzhou plant, its only overseas test and packaging facility. The worldwide expansion of AI investment is driving demand not only for DRAM but also for NAND flash.
Industry observers expect Samsung Electronics will accelerate efforts through additional investment to upgrade its Xi'an plant's NAND process from 128 layers (sixth generation) to 236 and 286 layers.
