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Technology

Samsung eyes Huawei and Foxconn with $8bn China chip investment

Company bolsters Xi'an flash memory factory after visit by Li Keqiang

This plant in Xi'an, China is Samsung Electronics' sole semiconductor production facility outside of South Korea.   © Samsung Electronics

SEOUL -- Samsung Electronics said Friday it will invest an additional $8 billion in a Chinese memory chip plant, increasing its capacity to supply local smartphone makers like Huawei Technologies.

The plant in the city of Xi'an is Samsung's sole memory factory outside of its native South Korea. The funds will go toward expanding the second phase of the campus, which will become entirely operational in 2021.

The Xi'an plant mainly supplies NAND flash memory chips to Chinese smartphone manufacturers. Huawei, the domestic leader, has grown deliveries this year, along with other brands.

Samsung -- the top global memory chip maker, according to IDC -- seeks to capture more of this demand in the world's biggest semiconductor market. 

When Chinese Premier Li Keqiang visited the Xi'an plant in October, he said China welcomes investments in high-valued-added industries. Samsung aims to build a favorable relationship with the Chinese government by playing up its commitment in a sector where Beijing seeks to absorb the world's leading technologies.

The South Korean tech conglomerate looks to supply non-Chinese clients as well. Hon Hai Precision Industry, the iPhone assembler known as Foxconn, runs a production facility near Samsung's Xi'an plant.

Friday's announcement comes after Samsung said in October that it ended smartphone production in China. The company's market share in the mainland shrank to less than 1% last year from 19% in 2013.

Samsung is also expanding its semiconductor production facilities at its Pyeongtaek complex near Seoul. The NAND market will grow 19% next year, according to U.S. data provider IC Insights, while demand for DRAM chips will jump 12%.

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