Samsung Electronics, the world's top memory chip maker, said on Tuesday it had decided to build a plant in China to start production of flash memory chips from 2013 as it seeks to ride a boom in smartphones and tablet computers.
The plant, if approved, would be Samsung's second overseas chip manufacturing site, and reflects the growing importance of Chinese market. Samsung is also planning to build a flat-screen production base in China.
The new line will enable us to meet fast growing demand from our customers and at the same time strengthen our overall competitiveness in the memory industry, the president of Samsung's memory business, Jin Dong-soo, said in a statement.
China is expected to overtake the United States as the top market for electronics products with its income levels growing, said Kim Young-chan, an analyst at Shinhan Investment Corp.
Samsung, whose flash chips are used in Apple's iPhone and iPad tablet, said it had yet to decide the exact amount of investment or a site for the plant.
Kim estimated Samsung would invest between 4 trillion won ($3.5 billion) and 5 trillion won to build the new facility.
Flash memory stores data even when power is turned off and is widely used in devices such as smartphones, tablets, digital music players and portable USB drives. It is also increasingly replacing hard drives as a main memory storage in laptops.
The new production line would use cutting-edge 20-nanometer-class processing technology.
Samsung said it had filed an application for the foreign production base with the South Korean government, which requires firms to make such requests for fear of leakages of the country's prized high technology.
Samsung is the world's biggest NAND flash memory maker with around 40 percent of the market. It competes with Japan's Toshiba Corp, Hynix Semiconductor Inc of Korea and Micron Technology Inc of the United States.
Samsung's sole foreign chip plant in Austin, Texas has also raised production to full capacity of logic semiconductors such as the processing chips used to power mobile devices ahead of schedule after a $3.6 billion investment, it said in a separate statement on Tuesday.
Shares in Samsung closed down 2.1 percent prior to the announcement, lagging a 1.0 percent drop in the wider market.
(Additional reporting by Miyoung Kim; Editing by Ken Wills and Jonathan Hopfner)