Samsung Borrows W20 Trillion for Foundry Investment

Samsung Electronics will borrow W20 trillion from subsidiary Samsung Display to invest in the semiconductor foundry business (W1=W1,268).

It will pay off the money by August 2025 at an annual interest rate of 4.6 percent. Samsung Electronics owns 85 percent of Samsung Display.

Samsung Electronics normally achieves an operating profit of around W50 trillion a year and invests much of that. Last year it posted around W43 trillion in operating profit and invested close to W48 trillion.

But the semiconductor unit is expected to suffer a loss in the first half of this year and an operating profit of only around W20 trillion for the whole year.

"Samsung Electronics possesses more than W100 trillion in cash reserves, but most of that money is being managed overseas," an insider said. "So they felt it would be more cost-effective to borrow the money from an affiliate instead of raising it overseas."

While rivals have cut back on investment and laid off workers amid an industry slump, Samsung has continued to increase investment and retain staff. The company believes that will give it an edge when industry conditions improve.