By Kim Yoo-chul

Samsung Electronics will set up its first chip plant in China, eventually worth $7 billion, the company said Monday.

``Samsung’s board has finally given the green-light to initially invest $2.3 billion to build an advanced NAND flash chip line in Xian, Shannxi Province,’’ said spokesman Ken Noh.

NAND flash memories are being used in high-end devices such as smartphones and tablets. The demand for the chips is rising thanks to the powerful sales increase of the devices.

The world’s biggest memory chipmaker Samsung plans to start the operation of the new line from the latter half of next year after starting the process within this year Noh said, Monday.

``This is the biggest investment plan that Samsung has ever invested to build up a chip line. The amount of the investment could shoot up to $7 billion as this is a multi-year project,’’ said the company spokesman.

Beijing was one candidate for the chip plant. But Samsung has picked up Xian as the final spot attracted by more financial and administrative supports from the regional government, said top Samsung executives asking not to be identified.

``Samsung is still in deep talks with the regional government over several pending issues such as the output amount and the hiring numbers. Because Samsung has so far seen substantial progress to narrow differentiations, negotiations will be solved soon,’’ according to the spokesman.

Samsung plans to apply a very fine-tuned 10-nanometer class processing technology at there and officials said the company is confidant to approve the plan from the Korean government.

There are some controversies over the Samsung plan because Samsung is the only memory chipmaker in this planet which can fully manage the advanced chip-making technology.

``We’ve already acknowledged over possible controversies for the leakage of key technology due to the plan. But should we do because our clients in China want us to guarantee output commitment and better pricing,’’ said Noh.

Samsung runs its chip plant in Austin, Texas, to mainly produce system memory chips for use in Apple’s i-branded devices such as iPads and iPhones. Samsung is supplying A5X chips to Apple’ latest iPad and Apple increased its order from Samsung to $11 billion this year from last year’s $7.8 billion as the Austin plant is ideally-positioned to ship more Samsung chips.

``One hidden fact is the Apple hopes to use Samsung chips produced from China not Korea mostly due to geopolitical reasons. Despite the ongoing legal battle with Apple, business is business,’’ said the unnamed Samsung executive.

China is Samsung’s ``highly-important’’ market as the country will rise as the single biggest consumer electronics market to eventually replace North America. Samsung has no sales and manufacturing posts in the western China.