By Kim Yoo-chul
Staff Reporter
Samsung Electronics said Sunday it would shut down an outdated 8-inch (200 millimeters) fabrication line in Austin, Texas of the United States.
The world's top vendor of memory chips plans to convert the 8-inch dynamic random access memory (DRAM) line to a 12-inch (300 millimeters) NAND flash fabrication line to produce more NAND flash memory chips from the latter half of next year.
"The operation of our 8-inch DRAM line in Austin, Texas, will be stopped from October due to production inefficiencies. We will upgrade the line to a 12-inch facility," company spokesman Kenneth Hong told The Korea Times Sunday.
Samsung plans to spend some $500 million for the move. The remodeling process is known to be completed some time in the second half of 2010.
Samsung now operates two lines in Austin ― an 8-inch DRAM line and a 12-inch NAND line.
"Samsung will apply a finer 30-nanometer-level processing chip technology to the converted line from the current 40-nanometer-level technology to boost production efficiency," the official said.
Regarding its sudden policy change from a few months ago, Hong said the company hasn't been receiving huge 8-inch chip orders, resulting in the company's decision to make the move.
Samsung is just producing some 30,000 sheets of 8-inch wafers monthly from its facility in Austin.
In March, Samsung's investor relations chief Robert Yi had clarified that the Suwon, Gyeonggi Province-based technology giant didn't have any plans to shut down the 8-inch line in Austin as the line was competitive in producing consumer-based DRAMs.
But Hong said his company currently doesn't have further plans to phase out 8-inch lines in Korea and transform them into advanced ones.
Samsung still runs four 8-inch lines in South Korea.
DRAM chips are widely used in traditional PCs, while NAND flash memories mainly go into high-end consumer electronics gadgets such as MP3 players, car navigations and digital cameras. Samsung is the leader in both the DRAM and NAND sectors.
Samsung's conversion plan, however, will not significantly affect the global NAND flash memory chip market because the ripples will be limited considering rising demand for consumer electronics.
"The conversion plan is widely expected and the actual production will begin from the latter half of next year," Park Hyun, an analyst at Prudential Investment, said.
"What Samsung wants is to boost its capability for system memory business by converting the 8-inch line. Ramping up NAND chip production is currently not a priority," Park said.
The steady popularity of budget PCs such as netbooks, mobile phones and the next-generation storage devices called solid state drives (SSDs), is pushing the increase in the average selling price of NAND flash chips.
DRAMeXchange, a market research firm, said the price of NAND chips rose 20 percent in the second quarter from the previous quarter due to strong demand in emerging markets for smaller consumer electronics.