Samsung Electronics plans to build the world's most expensive wafer fab in Pyeongtaek, South Korea, about 40 miles south of the center of the capital, Seoul.
Samsung has said it plans to invest about 15.6 trillion won (about $14.6 billion) on construction and equipment at a 790,000 square meter site in the Godeok Industrial Complex in Pyeongtaek with the work set to begin in the first half of 2015.
The fab is scheduled to begin operations in the second half of 2017. Samsung did not indicate whether it would be optimized for extreme ultra violet (EUV) lithography or running wafers of 450mm diameter.
Samsung held a signing ceremony for a memorandum of understanding (MOU) concerning the investment. The local authorities, representing the provincial and municipal governments of Gyeonggi Province, agreed to cooperate with Samsung in the construction and operation of the plant, as well as to provide assistance in preparing the requisite infrastructure.
"Our investment into the new fabrication plant will significantly influence the shaping of Samsung’s future semiconductor business," said Oh-Hyun Kwon, CEO and vice chairman of Samsung Electronics, who attended the ceremony.
It is not yet clear whether Samsung intends to use the wafer fab for the production of NAND flash or DRAM memory chips or for logic ICs. However it is normal to bring a new fab up on memory technology. Samsung has the option to repurpose existing lines between DRAM, NAND and logic depending on its success with contracts to make processors for other mobile device makers.
What is clear is that the company is seeking to boost its involvement in the semiconductor industry as profits from smartphones and tablet computers come under pressure from Chinese competition.
Samsung also announced guidance that its third-quarter operating profit likely fell by 59.7 percent to 4.1 trillion won (about $3.8 billion), well below a mean forecast of 5.6 trillion won largely due to competitive pressure in mobile devices.
Although Samsung is the world's leading supplier of smartphones it has seen market share decline and is being squeezed by Apple's iPhone at the premium end of the market and undercut by Chinese rivals such as Xiaomo at the bottom end.
One report said the Samsung wafer fab would be used for DRAM production and could start production as soon as the second half of 2016 and that is was, in part being announced to placate the South Korean government.
Samsung's previous largest wafer fab announcement was in April 2012 when it said it would spend $7 billion on a NAND flash wafer fab in Xian, in northwest China.
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