Samsung breaks ground on new chip line

PYEONGTAEK, Gyeonggi Province ― Samsung Electronics, the world’s top memory chipmaker, said Thursday it would start the production of semiconductors at a new plant from the first half of 2017.

The global tech giant revealed the plan during its ceremony to break ground for its new semiconductor manufacturing line in Pyeongtaek, south of Seoul, on Thursday.

Pinning high hopes on what will become the world’s largest chip-production plant, which will churn out more than 100,000 sheets of 12-inch wafers per month, Samsung said it would aim to cement its leadership in the global chip industry.

President Park Geun-hye praised Samsung’s investment, despite the company facing tough competition in the global manufacturing sector.

“The investment will provide new opportunities for young generations, and I hope the Pyeongtaek campus will become a hub of the world’s semiconductor manufacturing business,” Park said in a congratulatory speech.

Park also vowed to give full support for businesses and to eliminate unnecessary restrictions to encourage investment.

Samsung currently leads the global DRAM market with more than a 40 percent market share, beating rivals such as U.S. chipmaker Micron Technology. The Korean chip manufacturer, which held a 10.7 percent market share in terms of revenue in 2014, is challenging Intel, the world’s largest semiconductor firm with a 14.1 percent market share.

“Samsung is preparing to take the next big leap in the semiconductor business with the Pyeongtaek campus,” said Samsung vice chairman Kwon Oh-hyun in his speech, adding that “the firm will make constant efforts to become the world’s top semiconductor company and contribute to the nation’s economic growth.”

Around 600 of Samsung’s top executives and employees, officials from partners and customers, politicians and local residents attended the event Thursday. Among the participants were Samsung Group’s vice chairman Lee Jay-yong, Gyeonggi Province Gov. Nam Kyung-pil, and Pyeongtaek Mayor Gong Jae-gwang.

The construction plans for the new plant have been brought forward a year to keep pace with the Korean government’s “three-year plan for economic innovation” to prop up local and national economies.

The Korean government has simplified approval processes for the construction of the complex, and vowed to build necessary infrastructure in the Pyeongtaek area.

Samsung plans to make an initial investment of around 15.6 trillion won ($14.4 billion) by 2017 to build the first production line, which will go into operation in the first half of the same year at the earliest.

The investment is anticipated to generate 41 trillion won worth of output and create 150,000 jobs.

The company will reportedly invest at least 10 trillion won more to add more production lines.

It is forecast that the tech giant will roll out DRAM memory chips based on 10-nanometer-class technology at the Pyeongtaek production lines. But as executive vice chairman Kwon said earlier, some lines for application processors could be added depending on market demand.

Non-memory chips including APs are produced at Samsung’s facilities in Austin, the U.S.; NAND flash memory chips are produced at Samsung’s production lines in Giheung, Gyeonggi Province, and Xian, China; and the firm’s production facilities in Hwasung, Gyeonggi Province focuses on producing DRAM chips.

Samsung said the Pyeontaek campus will sit on 2.9 million square meters of land. It will play a pivotal role in Samsung’s initiative to build what the company calls an “IT valley,” a cluster of manufacturing facilities across the nation, including the semiconductor plants in Giheung, Hwasung, and Suwon, all in Gyeonggi Province, and facilities for displays in Cheonan and Asan, both in South Chungcheong Province.

Samsung’s semiconductor business posted 29.3 trillion won, up 24 percent year-on-year, in revenue in 2014.

By Kim Young-won (wone0102@heraldcorp.com)