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(LEAD) Samsung start production at Pyeongtaek chip line

All Headlines 16:47 July 04, 2017

(ATTN: ADDS details in last 6 paras)

SEOUL, July 4 (Yonhap) -- Samsung Electronics Co. said Tuesday it has started full-fledged chip production at its Pyeongtaek plant and announced it will continue making more investments to expand its output capacity.

The announcement came two years after the South Korean tech giant started the construction project in May 2015. The new Pyeongtaek facility, 70 kilometers south of Seoul, is the biggest of its kind in the country, Samsung added.

Samsung said the new line will focus on producing fourth-generation V-NAND products.

On the expansion, the company said some 30 trillion won (US$26 billion) will be spent on the Pyeongtaek production line through 2021, along with 6 trillion won on another chip production line located in Hwaseong, southwest of the capital city.

The company said the investment came as the global IT industry has been suffering from a shortage of computer chips. The demand for high-end chips will continue to increase following the development of the big data, artificial intelligence and automotive industries, it added.

Samsung said it is considering building an additional chip production line in Xian, China, to meet rising demand for NAND flash products in Asia's largest economy.

Samsung Display Co., meanwhile, is also considering establishing a new production line for organic light-emitting diode (OLED) products in Asan of South Chungcheong Province.

Industry watchers said Samsung Electronics Vice Chairman Lee Jae-yong, the heir-apparent of the family-controlled conglomerate Samsung, was behind the investment plan announced earlier in the day.

Lee has been imprisoned since February amid his alleged connection to a political scandal which led to the ouster of former President Park Geun-hye.

Industry sources said Lee received reports on the completion of the Pyeongtaek chip line as well as Samsung's business plan for the second half behind bars.

The decision to expand investment in the chips and display sectors also comes in line with the new government's plan to generate jobs and revitalize the national economy through cooperation with the business community, the sources added.

Industry watchers have been casting concern over the future of Samsung Electronics' business as the prolonged vacancy of its key decision-maker may have an adverse impact on its long-term strategy, although the South Korean tech giant is anticipated to post record earnings for the second quarter.

"As the absence of the owner delays decision-making procedures for investment projects which must be implemented on time, we are concerned about the company's business three to five years later," an official from Samsung said.

A bird's-eye view of Samsung Electronics Co.'s new chip production line located in Pyeongtaek, south of Seoul (Yonhap)

colin@yna.co.kr
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