Tens of trillions of loan contracts were won by affiliates unusually
Willingness to continue investing in a recession
Samsung Electronics, whose operating profit fell significantly due to the collapse of the semiconductor market last year, is borrowing 20 trillion won from Samsung Display. It is a very unusual decision for Samsung Electronics to borrow large sums of money from related companies rather than banks, and it is known that this is to continue investing in the semiconductor business.
Samsung Electronics held a board of directors meeting on the 14th and decided on a loan contract with Samsung Display. The loan period is between 17th and August 16, 2025, and the interest rate is 4.60% per annum. The 20 trillion won in debt is equivalent to 6.6% of Samsung Electronics’ equity capital of 304.8999 trillion won at the end of 2021.
Samsung Electronics, which has 129 trillion won in cash assets, is borrowing 20 trillion won from Samsung Display to maintain semiconductor investment at the previous year’s level despite the trend of reduced investment and production cuts by semiconductor companies -global conductors.
According to the industry, as the semiconductor market continues to slow down this year, Samsung Electronics’ operating profit will also decline significantly, leading to a temporary shortage of semiconductor investment funds. Samsung Electronics’ facility investment last year was a record 53.1 trillion won, of which 90% or 47.9 trillion was invested in semiconductors.
Samsung Electronics’ overall investment scale for this year has not been confirmed, but as a reminder, investments of a similar scale to last year are expected. The foundry (batch production) also plans to continue investing, focusing on expanding production capacity in Pyeongtaek, Gyeonggi Province, and Taylor, USA, in order to respond to demand for advanced processes.
Jaejoon Kim, vice president of Samsung Electronics’ memory division, said in a conference call on the 31st of last month, “The recent weakness in the market is not immediately conducive to earnings, but I believe it is an opportunity good to prepare thoroughly for the future,” he said.
An official from Samsung Electronics explained the meaning of the loan contract, saying, “We decided to implement the semiconductor investment as planned to prepare for future demand and strengthen technological leadership by using emergency methods of borrowing from subsidiaries. “
Samsung Electronics plans to repay the debt early if it has excess cash as the semiconductor industry is expected to improve in the future.
Reporter Seong-guk Park
