Samsung to begin work on chip unit

Samsung Electronics Co Ltd plans to begin building its new memory chip production line in China in late March, a spokesman said on Thursday, as the tech giant ramps up efforts to boost NAND flash technology to meet future demand.

The tech giant said in August last year that it expected to invest $7 billion over the next three years to expand its NAND memory chip production in Xi'an, the capital of Shaanxi province, but had not specified a future schedule.

The rapidly growing data center market, which needs more memory capacity to handle increasing data traffic, is expected to underpin revenue growth and margins for Samsung's NAND Flash business in 2018, research provider Trendforce said.

Currently, Samsung holds a monopoly position in the field of storage chips. Its revenue from NAND in the fourth quarter of 2017 rose 9.8 percent from the previous quarter to $6.17 billion, Trendforce said, as demand from both smartphone and server markets lifted shipments and average prices.

Samsung will formally begin the process near month-end at Xi'an, earmarked for NAND flash production, the spokesman said, but did not give any other details.

Shares of Samsung Electronics have risen about 13 percent from early March on an improved outlook for the memory chip market, putting to rest concerns that the recent boom might end, analysts said.

Last month, the South Korean tech heavyweight signed a memorandum of understanding with the National Development and Reform Commission, the nation's top economic regulator, with a focus on possible cooperation in chipmaking, artificial intelligence and semiconductor manufacturing.

The cooperation came after the NDRC spoke to Samsung in December after the prices of storage chips rose at an astonishing pace over the past 18 months.

"Memory chips are solid. For DRAM chips, server demand is very strong," said Kwon Sung-ryul, an analyst at DB Investment & Securities.

"NAND flash chip shipments and price movements are moving within expectations, but there's a chance that supply will become tighter again in the second half of 2018 due to rising demand."

The expansion is not expected to affect memory chip supply until 2019 at the earliest, analysts said.

Reuters-China Daily