Samsung spends $7 billion to build memory chip plant in Xi'an

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Updated: 2012-04-11 06:51

By Ding Qingfen and Lu Hongyan in Xi'an (China Daily)

Samsung Electronics Co, Asia's largest consumer electronics maker, announced on Tuesday it will open a memory chip factory valued at $7 billion in Xi'an, Shaanxi province, its largest ever overseas investment.

The move signals Samsung's expansion in the Chinese market, and is the largest foreign investment by value in western China.

The Samsung NAND flash factory in the capital city of Shaanxi province is expected to become operational at the end of 2013, with a monthly output of 100,000 units of chips. NAND flash is a type of memory widely used in smartphones and tablet computers.

The Xi'an plant will also be the company's second-largest memory chip production base worldwide.

China is now Samsung's largest overseas market. So far, the South Korean electronics maker has 23 companies and 155 sites in China. Nationwide, Samsung has three semiconductor bases.

"The new factory shows our commitment to the Chinese market, and we will continue to step up our efforts here," said Kim Young-ha, president of Samsung in China.

China is the largest market for NAND flash memory. Statistics from the market technology research provider Gartner showed China's NAND flash consumption accounted for half of the global market, reaching $29 billion. And by 2015, the nation's consumption is expected to rise to 55 percent of the global total.

China is now South Korea's largest trade partner and a major destination for South Korean companies.

Samsung's investment comes as a slew of foreign companies are relocating their factories to the western region from the coastal areas in East China due to rising labor costs.

While exports slide, "China aims to expand domestic consumption in the next five years, and Samsung's move signals its confidence in China's policy", said Wang Chao, deputy minister of commerce.

And it is also "in line with the nation's strategy to develop the western region".

Last year, foreign direct investment in western China grew 28.24 percent year-on-year to $11.57 billion, compared with an increase of 10 percent nationally over the same period, according to the Ministry of Commerce.

Ford Motor Co said earlier this month that it will increase the annual capacity at its factory in the southwestern city of Chongqing by 350,000 units to 950,000 vehicles by 2014, together with joint venture partner Chang'an Automobile Group Co.

Late last year, the central government launched a new version of industrial guidelines on FDI in China, in which the authorities encourage foreign companies to invest in western and central regions.

The guidelines also called for increased investment in high-tech, strategic emerging industries, research and development, and services.

Samsung's move is expected to spark a new wave of investment by foreign companies in China's western region.

"There will be a positive ripple effect from the Samsung case. We are confident foreign investment will grow in western regions," said Zhao Hongzhuan, member of the standing committee of the Xi'an Municipal Committee of the Communist Party of China.

Contact the writers at [email protected] and [email protected]

(China Daily 04/11/2012 page15)

Samsung spends $7 billion to build memory chip plant in Xi'an|Business|chinadaily.com.cn

 

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China eyes bigger investment in S Korea

Updated: 2012-04-14 13:20

By Ding Qingfen (China Daily)

A high-level Chinese delegation is due to arrive in South Korea over the weekend to discuss Chinese investment in its neighbor's culture, real estate and new energy industries.

Wei Jianguo, a former deputy commerce minister, said the governments of China and South Korea are pushing forward negotiations on a bilateral free trade agreement, which is due to be launched in the first half of this year.

"We expect to enhance Chinese investment in South Korea," said Wei, head of the Chinese delegation to the China-South Korea investment cooperation forum due to be held in Seoul on Tuesday and Wednesday.

The 80-strong delegation includes former vice-premier Zeng Peiyan and well-known economist Wu Jinglian, as well as investment-promotion officials.

On the South Korean side, the forum will be attended by representatives of more than 600 South Korean companies, led by the Korea Trade-Investment Promotion Agency.

"We are targeting promoting Chinese investment in the culture and property sectors, as well as ... new energy and environmental protection," said Wei, secretary-general of the China Center for International Economic Exchanges.

South Korean statistics showed China's investment in its neighbor was $3 billion last year, and was mainly in the tourism and entertainment industries. South Korean investment in China reached $36 billion in 2011.

"There is huge potential for Chinese companies to seek business opportunities in South Korea, as the industries are highly complementary," said Wei.

China is South Korea's largest trade partner, and a major destination for South Korean investment.

South Korea's Ministry of Knowledge Economy said the nation's FDI in the first quarter surged 17 percent year-on-year to a record high of $2.35 billion, with Japan being the biggest source of investment.

South Korea, whose economy has long been driven by foreign trade, plans to expand domestic consumption and create jobs to stimulate the economy.

The nation also reportedly plans to invest $963 million in 19 research and development projects to develop the energy sector this year.

"China and South Korea can cooperate in many sectors, and culture in particular," said Xia Youfu, a senior professor of economics at the University of International Business and Economics in Beijing.

But "we also have to be cautious about the government restrictions and public opposition".

In late March, China, Japan and South Korea signed a trilateral agreement to protect and promote investment among the three nations, after five years of negotiations. The agreement will also promote bilateral investment between South Korea and China, said experts.

Bilateral FTA

As there still exist differences among the three countries on details of the trilateral FTA talks, "China and South Korea are actively promoting the bilateral FTA", and the talks will probably start very soon, said Wei.

In May, the leaders of China, Japan and South Korea will meet in Beijing.

Park Jin-hyung, executive vice-president for China of the South Korean trade promotion agency, told China Daily that negotiations on the FTA between China and South Korea will probably precede a planned China-Japan-South Korea FTA, citing the strong interest from both sides.

While the United States is promoting the Trans-Pacific Partnership to remove trade and investment barriers among nine countries including Australia and Vietnam, China is working toward a free trade agreement with Japan and South Korea and is promoting Asian economic integration.

China and South Korea are not included in the TPP.

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China eyes bigger investment in S Korea|Economy|chinadaily.com.cn