The ambitious move aims to turn China into Samsung's second-largest chip-producing beachhead after Korea, underscoring the chipmaker's resolve to ride on the wave of China's greater role in the global industrial sector.

But it is also feared that Samsung's move could hurt the local chip-making base here, as Samsung takes steps to shift some of the focus from its home market to China, a tough battleground where a number of foreign and Chinese firms are jostling for leadership in almost every business field.

"In the long-term, the company has mapped out a plan to set up R&D centers for memory chips, non-memory chips and TFT-LCDs in China," the Samsung executive said. "Since the Samsung Group is entering a second phase of management reforms, Samsung Electronics will establish R&D centers earlier than planned, possibly in the second half of this year."

Samsung is expected to nurture its envisioned chip R&D center in China in a way that can match its existing R&D center in Giheung, Gyeonggi Province, one of the best chip facilities in the world.

The R&D center in Suzhou, if established as planned, will be linked with other chip-producing divisions like production and sales, targeting the fast-growing demand for chips in China.

Samsung's China R&D center plan comes after the chip industry is slowly staging a recovery. The benchmark chip prices on the spot market have firmed up in recent weeks, though analysts are still cautious about the advent of a full recovery as seasonal factors are affecting the surge in prices.

Samsung's move is also likely to set off alarms at other major chip producers as the Korean giant pulled off impressive positive results recently despite the frustrating slump that hobbled the global chip industry.

One of the concerns is that Samsung's gambit for the Chinese chip market could weaken the domestic chip-producing base and China might emerge as a serious contender in the chip market if Samsung fails to safeguard its chip solutions there, people familiar with the matter said.

China is fast catching up with Korea, the fourth-largest economy in Asia, in almost every sector.

According to the Samsung source, a research center specializing in the development of chip packaging technologies will be set up in Suzhou within the second half of this year. The center in China will be Samsung's second overseas R&D facility after the first one in Austin, Texas.

Samsung already secured the approval from the Chinese authorities for setting up a research center there.

If the packaging R&D center is completed smoothly, other centers for memory chips and LCD technology development will be established next year.

Samsung targets to jack up its annual revenue from the Chinese chip market to $4.2 billion by the end of 2006.

By: DocMemory
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