Samsung Electronics Co. (005930), the world’s largest maker of computer-memory chips, will spend $7 billion building a semiconductor factory in China as demand grows, fueled by mobile devices including Apple Inc. (AAPL)’s iPhone and iPad.
The company will invest $2.3 billion initially in the Xi’an plant, Suwon, South Korea-based Samsung said in a regulatory filing today. The factory will start producing semiconductors known as NAND flash next year.
Samsung is boosting spending as demand for flash memory, used to store media including photos, videos and applications permanently, is expected to climb 49 percent in the five years to 2015, according to Englewood, Colorado-based IHS Inc. (IHS) The Xi’an facility is the company’s largest investment in an overseas factory, Samsung said in a statement.
“A single factory of this size could be the largest in the industry,” Seo Won Seok, a Seoul-based analyst at Korea Investment & Securities Co., said by phone. “For NAND flash, China will be a key production site, along with Korea.”
Samsung is building the plant in China because the world’s most populous country is growing as a key chip market, the company said in December. Competing memory chipmakers, including Tokyo-based Elpida Memory Inc. (6665), are losing money after the prices for DRAM chips, another type used in personal computers, reached a record low.
Samsung opened a new factory in South Korea in September. The 12 trillion-won ($10.6 billion) facility is the largest in the industry and can produce NAND flash chips as well as DRAM.
The company also has a semiconductor plant in Austin, Texas, making both memory and logic chips, including application processors used in mobile phones.
Samsung started operating the Austin factory’s logic-chip production line at full capacity in October, about five months after operations began.
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