Samsung Electronics Co Ltd said on Monday it would invest 636.9 billion won ($614.2 million) in new memory chip lines to boost production of flash and DRAM (dynamic random access memory) chips.
The South Korean firm, the world's top memory chip maker and the most valuable technology firm outside the United States, is aggressively spending in an attempt to maintain an edge over rivals in the price-volatile and highly competitive market and to capitalise on an expected recovery in chip prices.
Under the investment, which is part of Samsung's 2005/2006 budget plan, mass production from the new lines should start in the second half of 2006, a Samsung spokeswoman said by telephone.
The move comes after a top Samsung executive said that prices of its core memory chips were set to stabilise in the second half of 2006 and lower NAND flash chip prices would boost demand.
Hwang Chang-gyu, president and chief executive of Samsung's semiconductor division, said in early November a fall in DRAM chip prices would be sharper than the average 30 percent drop seen in the past few years before stabilising in the second half.
Hwang expected prices of flash memory chips, used in hot-selling digital gadgets such as mobile phones, digital cameras and portable music players, would maintain an average 40 percent fall as had been forecast before.
The South Korean firm said in a filing to the Korea Exchange on Monday the investment was aimed at gearing up to meet an expected increase in chip demand.
Samsung, which competes with local rival Hynix Semiconductor Inc, Micron Technology Inc and German chip maker Infineon Technologies AG in the computer chip market, aims to boost its chip sales by more than three-fold to $61 billion by 2012 from $17 billion last year.
In the flash chip market, Samsung competes with Japan's Toshiba Corp. In a separate statement, Samsung said it planned to triple its chip sales in China to $5.5 billion by 2010 to meet demand from China's IT sector, which it said was expected to grow at an annual rate of 11 percent for the next five years.
Shares in Samsung closed down 0.96 percent at 621,000 won before the announcement was made, lagging a 0.3 percent drop in the broader market.