Samsung to invest $7bn in China memory chip factory

Samsung Electronics, the world's biggest memory-chip maker, has unveiled plans to invest $7bn (£4.4bn) towards building a chip factory in China. Samsung will initially invest $2.3bn in the plant, which will make chips for smartphones, tablets and MP3 players, and increase its investment gradually. The firm has been looking to tap into the lucrative Chinese market, but there have been fears of technology leaks. Samsung won a government approval to build the plant earlier this year. In an emailed statement to the BBC, Samsung said the new facility will help it "rapidly respond to meet the fast-growing demand from customers and further strengthen competitiveness in the memory industry". The plant is expected to start production by the end of 2013.

Over the years, China has become a leading manufacturing hub for consumer electronics. Contract manufacturers such as Foxconn, have been making gadgets ranging from smartphones to tablets PC for leading global brands. Many of these products use memory chips manufactured by Samsung. Analysts said having a production facility in China will help Samsung to further strengthen its position with its customers. "Inventory cycles are very short for electronics manufacturers," Tim Charlton of Charlton Media Group told the BBC. "You need to be close to your customers for inventory and delivery reasons." He explained that being in China will help Samsung take out extra layers of transport and storage and ensure speedier deliveries to its clients. "It makes perfect sense for them."