Samsung plans US expansion, would shift manufacturing from Mexico

Samsung Electronics Co. is planning a major investment to expand its U.S. production facilities, according to people familiar with the matter, with at least five states in discussions.
 
The initial capital investment is expected to be around $300 million, several of the people said, with Samsung shifting some production of oven ranges to the U.S. from Mexico. The move could generate around 500 jobs, those people said.
 
Talks are continuing and no final decisions have been made, with a start date for oven-range production still undetermined, the people said, so the details may change.
 
In subsequent years, Samsung could eventually ramp up US manufacturing of refrigerators, washers, dryers and other home appliances, which could make the total investment significantly larger, according to people familiar with the discussions. But no firm deadline or commitment is set for those decisions, the people said.
 
Samsung’s interest in a U.S. factory was influenced by the election of US President Donald Trump, according to people familiar with the matter. Mr. Trump campaigned on a desire to create more manufacturing jobs in the country—and has threatened potential penalties for companies that don’t comply.
 
The South Korean electronics giant, the world’s largest manufacturer of smartphones, memory chips and televisions, has had initial discussions with Alabama, Georgia, North Carolina, Ohio and South Carolina, according to the people. Among those, South Carolina is a strong contender, according to a person familiar with the developments, with Samsung expressing interest in a site around Blythewood, S.C.
 
In response to an inquiry from The Wall Street Journal, Samsung confirmed its U.S. plans for the first time in a company statement. It said “preliminary” discussions had taken place about a new home-appliance facility. “However, this is a complex process that, like all strategic business decisions, will not be made final until it is determined through proper due diligence and planning that it is the best option for Samsung,” the company said.
 
Samsung started reviewing U.S. options “early last fall,” the company said, meaning before the November election. A Samsung spokeswoman declined to elaborate beyond the statement.
 
The Suwon, South Korea-based firm has signaled to the states that it prefers to move into an existing facility rather than build a new one, according to people familiar with the discussions. Many of Samsung’s home appliances are currently manufactured in Mexico.
 
For decades, Samsung has spent heavily in the U.S., ranking as one of the country’s largest direct foreign investors. In November, just days before Mr. Trump’s election, the technology giant said it would invest more than $1 billion in its Austin, Texas semiconductor factory to boost production of processor chips for smartphones and other devices.
 
Since Mr. Trump’s election, some large firms across Asia have pledged to expand U.S. operations or investments. Masayoshi Son, head of Japan’s SoftBank Group Corp., said after a meeting with Mr. Trump in December that he would invest $50 billion in the U.S., while electronics assembler Foxconn Technology Group has announced plans for expansion.
 
Samsung’s hometown rival LG Electronics Inc. said last week that it would build a new home-appliance manufacturing factory in Tennessee, creating at least 600 jobs and investing $250 million.
 
In a sign of Samsung’s stature in the U.S., Samsung Vice Chairman Lee Jae-yong was the only executive from a foreign company to be invited to a mid-December tech industry meeting with Mr. Trump, then the president-elect, according to people familiar with the matter.
 
The gathering at Trump Tower in New York drew the chief executives of Apple Inc., Amazon.com Inc., Microsoft Corp., Google parent Alphabet Inc. and others.
 
Mr. Lee didn’t attend. According to a person familiar with the situation, Mr. Lee has been blocked by South Korean prosecutors from leaving the country in connection with his alleged role in a wide-ranging corruption scandal that has reached the highest ranks of South Korea’s political and corporate elite.
 
A Samsung spokeswoman declined to comment on whether Mr. Lee was invited to the tech meeting.
 
Mr. Lee was indicted on bribery and other charges last week, and his trial begins Thursday. He has denied wrongdoing.
 
Rolfe Winkler contributed to this article.

Chaebol’s bet

• Samsung might eventually ramp up US manufacturing of home appliances, which could make the total investment significantly larger
• For decades, Samsung has spent heavily in the US, ranking as one of the country’s largest direct foreign investors
• In November, Samsung said it would invest more than $1 bn in its Austin, Texas semiconductor factory to boost production of processor chips

Source: The Wall Street Journal