Samsung Electronics breaks ground on new chip line

South Korean tech giant Samsung Electronics Co. broke ground on a new chip-production line on Thursday, aiming to further expand its clout in the semiconductor sector amid its ailing smartphone business.

The 15.6 trillion won ($14.4 billion) chip line in Pyeongtaek, some 70 kilometers south of Seoul, is scheduled to be ready to start production in the first half of 2017. It marks Samsung's largest-ever investment in a single production line.

Samsung estimates the new plant will likely generate some 150,000 jobs and induce 41 trillion won in production. The mammoth investment plan was announced in October 2014.

The groundbreaking ceremony was attended by President Park Geun-hye and 600 other officials from the government and related companies.

"(Samsung Electronics) is a leading South Korean firm that went through the Miracle on the Han River," Park said, referring to the country's rapid economic development observed since the 1960s.

"The Pyeongtaek line reflects Samsung's entrepreneurship of making proactive investments, and not just settling on its achievement up to now. It also should be highly evaluated that the company made aggressive investments and gave opportunities to the young," she added.

Samsung said the new chip plant represents a new challenge for the chip industry over the next 40 years.

"Samsung's chip business, which kicked off in a country that lacked technology, is poised to make another leap for South Korea's future," Samsung Electronics CEO Kwon Oh-hyun said. "We hope that the Pyeongtaek line will play a big part in materializing the country's creative economy policy."

"The Pyeongtaek line will also bolster Samsung's leadership in the mobile and server (chip) markets and help the firm to gain an upper hand in the Internet of Things industry as well," the company added.

Samsung, which marked 40 years in the chip business last year, has been the top player in the global memory chip market for 22 years running.

Samsung Group is also one of the latest South Korean conglomerates to participate in the government's creative economy policy, which seeks to generate new business opportunities and jobs by integrating information technology with other industries.

Samsung has obtained 2.89 million square meters of land in Pyeongtaek, and aims to build a production line on 790,000 sq. meters in the first phase of the project.

Upon completion, the Pyeongtaek plant will be Samsung's largest chipmaking facility, with the size of those in Giheung and Hwaseong standing at 1.32 million sq. meters and 1.58 million sq. meters, respectively. It will be also larger than Samsung's chip facility located in Xian, China, which stands on a lot of 1.39 million sq. meters.

Industry watchers expect Samsung will solidify its lead in the global chip industry through its massive production cluster of Pyeongtaek, Giheung and Hwaseong.

The company said it will have the new line produce memory chips or system LSI, depending on the market conditions.

Samsung Electronics took up 40.4 percent of the global DRAM market in 2014, up from 36.2 percent held a year earlier, industry data showed, apparently helped by state-of-the-art 20-nanometer DRAM products that are faster at data handling and better in saving power.

The leader's smaller local rival, SK hynix Inc., boasted a 27.4 percent share in 2014, outpacing U.S. Micron Technology Inc. and Japan-based Elpida Memory Inc., which posted a combined 24.6 percent share.

Samsung invested 14.3 trillion won in its chip business last year, up from the 12.6 trillion won posted in 2013. (Yonhap)