By Kim Yoo-chul
Samsung Electronics said Tuesday it plans to build its first memory chip plant in China with an investment of some $3.6 billion in an ambitious strategy to meet rising demand for high-end smartphones and tablets.
The company already runs a chip factory in Austin, Texas, that mainly produces mobile application processors mostly used in Apple’s iPhones and iPads.
It is set to create a new legal entity by partnering a Chinese chipmaker, though the company declined to divulge names.
“Samsung is waiting for final approval from the Ministry of Knowledge Economy (MKE) to build our first overseas memory chip plant in China,” the firm said in a statement.
Spokesman Ken Noh said the new factory will produce NAND flash memories, a vital component used in smart devices with the operating timing slated for 2013.
“Samsung will create a joint venture to operate the chip facility and we are in talks with top Chinese officials to decide the location for the factory and to authorize our new partner,” said an executive directly involved.
He said the investment will be between 3.5 trillion won and 4 trillion won.
Samsung will apply a finer 20-nanometer level processing technology in the new factory and has shown confidence in defying controversy over a possible technology leak.
Samsung is the only firm to fully handle highly-advanced chip making technologies. It has at least a 1-year technology gap with domestic and overseas rivals such as Hynix Semiconductor of South Korea and Toshiba of Japan.
“Another interesting point is that Samsung is receiving more calls from leading Chinese PC makers to supply qualified NAND flash memory chips because it can make on-time deliveries, guarantee product quality and offer better pricing,” said another senior Samsung executive by telephone.
The new plan comes after Samsung recently received a favorable ruling from a court in California over its legal tussle with Apple. Samsung officials said it helps their side, even ahead of the forthcoming ruling from a court in Paris, France, where Samsung is seeking a complete sales ban of Apple’s latest iPhone 4S smartphone.
“NAND flashes that will be manufactured in our new Chinese plant will also be exported to be used in Apple’s ‘i-branded’ products. Samsung is applying a two-track approach to Apple. That means the firm will remain a critical chip-providing partner to Apple despite the ongoing legal disputes,” added the Samsung executive.
Samsung extended its contract with Apple for several years to supply its advanced mobile application processors including the premium A6 model. Apple will use the Samsung chips in its future generations of iPhones and iPads.