Samsung Scales Back P5 Construction And Cuts Costs

Samsung Electronics, one of the world’s semiconductor giants, is making headlines again—this time for a sweeping overhaul of both its construction and financial strategies. On August 18, 2025, the company announced a significant shift in the development of its highly anticipated P5 construction project in Gyeonggi Province, South Korea, alongside deep changes to its employment and financial management. These moves, according to 딜사이트 and 아이뉴스24, mark a pivotal moment for Samsung as it seeks to balance ambitious expansion with prudent cost control amid global economic uncertainty.

The P5 construction site, part of Samsung’s sprawling Pyeongtaek campus, has long been viewed as a linchpin in the company’s efforts to ramp up production of advanced memory semiconductors, particularly High Bandwidth Memory (HBM) chips. But after years of delays and a period of virtual shutdown, Samsung is now accelerating the project—albeit with a scaled-back design. Originally planned as a four-story facility, P5 will now be built with three floors, a move that insiders say is aimed at improving efficiency and reducing risk as the company juggles multiple large-scale investments.

“We judged that there was no need to push ahead with a four-story fab, given our lack of experience and the overall slowdown in Pyeongtaek campus investment,” a semiconductor industry official told 딜사이트. The company is set to begin preliminary preparations in October 2025, with full-scale construction expected to kick off early next year. The revised plan will reduce the number of clean rooms from eight to six, but the investment remains substantial—estimated at around 70 trillion won, compared to the 50 trillion won spent on the adjacent P3 plant.

Samsung’s decision to streamline the P5 project comes as it faces mounting pressure to optimize resources. The company is simultaneously investing 360 trillion won to build a 7.78 million square meter advanced system semiconductor national industrial complex in Yongin, also in Gyeonggi Province. With the Yongin project set to break ground next year, Samsung’s leadership appears determined not to let the P5 construction monopolize time and manpower. “We can’t afford to devote excessive time to P5 alone, especially with the Yongin system semiconductor complex also set to start construction next year,” another official explained.

Despite the scale-down, the P5 facility is still expected to play a crucial role in Samsung’s semiconductor roadmap. While its exact use is yet to be finalized, most of the space will likely be devoted to memory chip production, with some capacity reserved for foundry operations. The company recently began ordering equipment in preparation for mass-producing sixth-generation 10-nanometer DRAM, signaling its intent to stay at the forefront of the HBM market as global demand rises.

On the ground at Pyeongtaek, work is already underway to prepare the site for construction. “A small team is currently organizing the columns (H-beams) on the P5 site,” a campus insider told 딜사이트. These steel columns, which form the backbone of the building, have been stockpiled since the project was shuttered last year after only preliminary groundwork. With the site dormant for so long, concerns about contamination and risk have grown. The plan now is to remove the columns, complete foundational work over the next two to three months, and then move swiftly into the structural phase, with Samsung C&T aiming to complete column installation within 25 months. To keep on schedule, round-the-clock construction is anticipated once work begins in earnest.

But the P5 construction isn’t the only area where Samsung is tightening its belt. The company is also making bold moves to manage its debt and labor costs, reflecting a broader shift toward financial conservatism. According to 아이뉴스24, Samsung paid down nearly 4.3 trillion won in debt during the first half of 2025, bringing its total borrowings down to 12.8 trillion won—a 25% drop from the end of last year. The company slashed its short-term debt by half, from 13.2 trillion won to 7.2 trillion won, while increasing long-term debt by 33% to 5.6 trillion won. This restructuring, analysts say, eases short-term liquidity pressures and positions Samsung to weather ongoing global trade tensions, particularly between the U.S. and China.

Samsung’s approach to debt stands out in the industry. For two decades, the company prided itself on “zero-borrowing management,” paying off nearly all outstanding bonds by 2004. This year, however, it inked a 10 trillion won credit agreement with South Korea’s four largest banks—a move that, while breaking with tradition, allows Samsung to flexibly manage cash flow without resorting to equity issuance or new bonds. “Samsung’s recent external borrowing is about stabilizing its capital structure, not a sign of cash shortages,” a business insider explained to 아이뉴스24.

Labor costs have also come under the microscope. For the first half of 2025, Samsung’s total employment cost hit 4.3 trillion won, up 25% from the same period last year. The average cost per employee jumped 33%, driven by higher wages, bonuses, and benefits. The company, which employs around 53,600 people across its semiconductor and display businesses, has been reviewing employment costs since June and aims to finalize a new cost-control strategy by the end of August. “We plan to adjust employment costs within two to three months from August 2025,” a Samsung representative said, highlighting ongoing efforts to trim unnecessary personnel expenses and implement restructuring where needed. This continues a trend dating back to 2004, when Samsung began a decade-long labor cost reduction campaign.

Inventory management is another area where Samsung’s caution is evident. The company’s inventory valuation allowance—a measure of expected losses from unsold goods—rose nearly 30% to 6.45 trillion won in the first half of 2025, much of it tied to memory chips. “The sharp drop in Q2 memory results was largely due to inventory valuation allowances, which reflect our conservative financial policy,” Memory Division Vice President Kim Jae-joon explained to 아이뉴스24.

Despite these cost-cutting measures, Samsung’s financial stability remains robust. Global credit rating agency Standard & Poor’s reaffirmed Samsung’s AA- rating with a stable outlook, citing the company’s “gradual improvement in performance over the next one to two years, based on a moderate recovery in the memory semiconductor sector.”

For Samsung, the balancing act between aggressive investment and financial discipline is nothing new—but the scale and speed of its current moves are remarkable. As the company prepares to dismantle major cooling towers and related facilities at P5, and as it reduces its operational footprint by 140% compared to previous levels, the message is clear: Samsung is determined to stay ahead in the global semiconductor race, but not at the expense of fiscal health.

With the P5 site closure and construction overhaul set for completion by the end of 2025, and a new employment cost strategy on the horizon, all eyes are on Samsung to see whether its latest round of streamlining will yield the competitive edge it seeks in a turbulent industry.