Samsung to build a $3.4 billions new chip plant.

WorldWide Tech & Science. Francisco De Jesùs.

Samsung to build a $3.4 billions new chip plant.

Samsung Electronics plans to invest some 4 trillion won (about $3.4 billion) to build a new chip plant in Hawseong, Gyeonggi Province, in South Korea,where its key chip lines are located, Samsung officials said, Friday. 

The new line, the 17th, will start commercial operation within the first half of 2014. 

Samsung, however, is highly likely to skip the groundbreaking ceremony for the plant, the officials said. 

The latest factory-building plan is a part of this year’s 15 trillion won investment plan in chips by Samsung, the officials said.

The new line will only produce profitable non-memory and foundry chips, according to the officials.

Samsung is also planning to switch some of its existing memory chip-producing lines into non-memory chips, though the company declined to confirm. 

It has already been providing high non-memory chips to Apple and the company is receiving more calls from Qualcomm, Texas Instruments and Nvidia for customized chips on a contract basis. 

“Non-memory chips is Samsung’s next cash-cow. By producing such profitable chips for the latest line, the company will boost its capability to handle non-memory chip-related businesses,” said a Samsung executive contacted by The Korea Times. 

The head of Samsung’s system LSI business Woo Nam-seong recently said the company is fully operating its non-memory lines and didn’t rule out the possibility of building a new one. 

Chipmakers are rapidly moving up the value chain by bundling together various chips such as APs, baseband chips, mobile DRAM and NAND flash chips together in a package.

The Samsung officials said the chip-making giant will produce a maximum of 1 million 12-inch-wide wafers annually, from that line. Samsung plans to apply finer 28-nanometer and 32-nanometer processing technologies for the new line.

“From 2014, Samsung’s annual production capacity for non-memory chips will rise to five million,” said the executive. The Samsung official, however, declined to be named.

Samsung currently runs two non-memory chip lines in Giheung, Korea and Austin, Texas, the United States. “Samsung had earlier planned to produce memory chips from the new line, however, we’ve changed the plan to respond with the industry’s new trend,” said the unnamed Samsung executive.

The Samsung investment plan comes after its key rival — Taiwan Semiconductor Manufacturing Co. (TSMC) — in foundry chips, recently said it will invest more than $11.9 billion for customized chips.

Samsung aims to become the world’s biggest manufacturer of custom chips after surpassing TSMC in the next few years. “It’s a very profitable market with a high profit margin. The demand for smartphones and tablets will steadily rise, giving a clue for Samsung to massively invest in non-memories,” said Jin Sung-hye, an analyst at Hyundai Securities.

Samsung is the planet’s fourth-biggest foundry chip company including $1 billion worth of wafers for Apple last year, said a market research firm Gartner.