Samsung to Proceed With $4 Billion Austin Plant Expansion

Samsung Electronics Co. (005930), the world’s second-largest semiconductor maker, said it will go ahead with a $4 billion expansion of its U.S. chip plants in Austin, Texas, betting on surging demand for smartphone processors.

Samsung is boosting manufacturing capabilities for application processors and will be in full production in the second half of 2013, the Suwon, South Korea-based company said in a statement today.

The expansion in so-called logic chips is part of Samsung’s effort to win new customers and reduce its dependence on the volatile memory-chip market. The company is affirming its plans amid a legal fight with Apple Inc. (AAPL) -- its largest phone- processor customer -- that has fueled speculation by analysts such as Amit Daryanani at RBC Capital Markets that Apple may go elsewhere for supply.

“Our ongoing, multibillion-dollar investments in Austin will expand our footprint as a comprehensive semiconductor hub,” Woosung Han, president of Samsung Austin Semiconductor, said in a separate statement.

The company’s push into logic, including phone processors, is an attempt to challenge contract chip manufacturers such as Taiwan Semiconductor Manufacturing Co.

Samsung’s Austin campus employs 2,500 workers and is its biggest chip-production facility outside of Korea. The site also includes a 200-engineer research and design center, which is expanding as well, Samsung said.

The company, the world’s largest maker of smartphones and TVs, opened the site in 1996 and this expansion will bring its total investment in Austin to $15 billion.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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