Samsung Discusses Adding U.S. Factory -- WSJ

South Korean firm is in talks to invest $300 million at plant Caterpillar is leaving

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the US print edition of The Wall Street Journal (June 23, 2017).

SEOUL -- Samsung Electronics Co. is in late-stage discussions to invest about $300 million to expand its U.S. production facilities at a factory soon to be vacated by Caterpillar Inc., according to people familiar with the matter, with an announcement expected as early as next week.

The facility eyed by Samsung is in Newberry, S.C., a town located about 150 miles northwest of the port of Charleston, the people said, with plans to shift over some production of oven ranges made currently in Mexico. The investment could generate around 500 jobs, and though the start date is unclear, production would likely begin next year, the people said.

Samsung could eventually ramp up U.S. manufacturing of refrigerators, washers, dryers and other home appliances in subsequent years, the people said. Final details over incentives and other matters are still being hammered out between Samsung and South Carolina officials, the people said. Though unlikely, it is still possible for either party to walk away from the pact, the people said.

The timing of the announcement could still change, the people said. But South Korea's newly-elected President Moon Jae-in is scheduled to meet U.S. President Donald Trump for the first time next week in Washington.

A Samsung spokeswoman declined to comment.

Samsung's interest in a U.S. factory was influenced by the election of Mr. Trump, who vowed on the campaign trail to bring more manufacturing jobs back into the country, The Wall Street Journal reported in March.

Mr. Trump's reshoring mantra brought promises from Asian billionaires such as SoftBank Group's Masayoshi Son and Foxconn Technology's Terry Gou. Foxconn, the assembler of iPhones and other electronics, said Thursday it was considering seven states in the American heartland to invest $10 billion or more in factories.

Samsung's crosstown rival LG Electronics Inc. said in February it planned to build a new factory for washing machines in Tennessee, its first major U.S. plant.

Samsung had previously said that it started reviewing U.S. options in the early fall last year, meaning before Mr. Trump's victory in November. At least five states were under consideration at the time, the Journal reported.

In recent weeks, state officials from South Carolina and Alabama traveled to South Korea to pitch their sites and incentive packages to Samsung, with the Newberry facility emerging as the leader, the people said. The two states had courted Samsung officials for months, including in high-level discussions at a Republican Governors Association event this spring, two of the people said.

The South Korean electronics giant, the world's largest manufacturer of smartphones, memory chips and televisions, had initially looked at a site near Blythewood, S.C., but another company landed the facility, two of the people said.

Samsung had told state officials that it preferred moving into a pre-existing facility, rather than building a new factory, according to people familiar with discussions.

A team of Samsung officials visited the Newberry site, which is located near Interstate 26, a freeway that feeds directly into the port of Charleston, according to two people familiar with the matter.

Caterpillar said last year that it would close the Newberry facility, a packaging plant for electric generators, with 325 jobs, and eventually shift those positions to other U.S. locations.

Samsung has invested heavily in the U.S. over the years, making it one of the country's largest direct foreign investors. In November, just days before Mr. Trump's election, Samsung 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.

Samsung's consumer-electronics unit represented nearly one-fourth of the company's annual revenue last year of 201.9 trillion South Korean won ($176.8 billion). But the unit, which makes refrigerators, ovens, televisions and other home appliances, brings in less than 10% of overall operating profit.

In April, Samsung notched its highest quarterly profit in more than three years, powered by strong sales of components like memory chips and display panels.

Write to Timothy W. Martin at timothy.martin@wsj.com

(END) Dow Jones Newswires

June 23, 2017 02:47 ET (06:47 GMT)