Samsung builds new chip plant

Samsung Electronics announced Monday that it was going to spend 15.6 trillion won ($14.7 billion, or 11.6 billion euros) on a new chip factory to be built in the company's existing Godeok Industrial Complex in Pyeongtaek.

The plant was to produce either logic or memory chips, Samsung said in a statement, and construction for it was scheduled to begin in the first half of 2015. About 150,000 jobs would be created at the new plant - equal to almost a third of the city's population.

The world's leading producer of smartphones, computer chips and televisions also said that the new plant was expected to help Samsung meet "growing demand for advanced semiconductor product."

"Samsung will continue to balance its domestic and foreign investments to ensure optimal global production structure," it added.

Smartphone business squeeze

Samsung's investment in its chips business comes as its smartphone business is under pressure by Apple in the premium segment and Chinese rivals in the medium and low-end range. Operating profit at Samsung's mobile division dropped for the second consecutive quarter between April-June.

Semiconductors, however, are expected to bring in steady profits in the future bolstered by increasing orders for mobile phone chips. Market conditions for memory chips are also seen as favorable due to strong demand from personal computers and servers.

Analysts have forecast that Samsung's semiconductor division will report stronger operating profit than the handset division in the third quarter for the first time in more than three years.

The South Korean technology leader said it brought forward its investment plan for Pyeongtaek by more than a year after a government call to boost economic activity in the area. The government in Seoul has recently announced plans to increase taxes on excess corporate profits under efforts to force companies to increase investments, wages and dividends.

uhe/sgb (dpa, Reuters)