According to Yonhap News,

(SEOUL=Yonhap News) South Korea's tech giant Samsung Electronics Co. said Monday it plans to invest some 15.6 trillion won (US$14.7 billion) to set up a new chipmaking facility in the northwestern part of the country to better meet the soaring global demands for chips.

Samsung said it will break the ground on the new plant in Pyeongtaek, some 70 kilometers south of Seoul, in the first half of next year, with the aim of starting its commercial production in 2017.

"The semiconductor industrial zone set to be established in Pyeongtaek will take a crucial role in the future of Samsung's chip business," said Kwon Oh-hyun, chief executive of Samsung Electronics. "We wish to express gratitude to the government, Gyeonggi Province and Pyeongtaek for their support on the investment."

Samsung said it estimates the new plant will directly and indirectly generate some 150,000 jobs, along with a wealth effect of 40 trillion won.

"We have not yet decided whether to have the plant focus on memory chips or system chips," said Kim Ki-nam, head of Samsung's memory chip business division, adding the company will finalize its decision depending on market conditions.

Kim added Samsung will continue to invest the same amount next year, if not more in the semiconductor sector.

"Although there are concerns over a possible oversupply of memory chips, with the rising new demands from smartphones, Samsung's move will not cause such saturation," Kim added. "We expect to maintain a stable level."

With the tech giant already holding two more chipmaking facilities in Giheung and Hwaseong, also located in Gyeonggi Province, Samsung said the new production line will complete what it calls a state-of-the-art "semiconductor cluster" that will emerge as the hub for the global chip industry.

Samsung said it has obtained 2.83 million square meters of land in Pyeongtaek, adding the 15.6 trillion won will be used to build a production line on 790,000 sq. meters of the land. The electronics giant will come up with an additional investment plan in the future depending on market conditions. Upon completion, the Pyeongtaek plant will be Samsung's largest chipmaking facility, with the size of those at Giheung and Hwaseong standing at 1.32 million sq. meters and 1.58 million sq. meters, respectively.

In 2013, Samsung's combined investment in its chip business came to 12.6 trillion won. Samsung also has semiconductor plants in Texas, the United States, along with three more in China.

Shares of Samsung Electronics gained 0.88 percent to close at 1,151,000 won on the main bourse Monday, while the KOSPI moved down 0.39 percent from the previous trading session.

colin@yna.co.kr

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Source: Yonhap News (October. 06, 2014)