Samsung Electronics will invest $1.7bn over the next five years in its fast-growing manufacturing hub in Kunshan, in China’s Jiangsu province.

The money will be used to build additional workshops, acquire machinery and equipment, and set up new research institutes.

According to Samsung official Thomas Oh, the research facilities will be managed by Samsung Electro-Mechanics Co (SEMC) to support a chip carrier project.

The expansion comes as the South Korean firm attempts to diversify its clients and exert control over its vast manufacturing network in China, which includes 250 supplier factories. As of end 2012 a total of $81m had been invested in the Kunshan plant, which was set up in 2008 to develop and produce electronic components.

In a separate development Samsung will open a plant manufacturing NAND flash memory chips in Xi’an in Shaanxi province in December. Mass production will begin two months later with a monthly output of 100,000 chips, which are widely used in smartphones and tablet computers.

The Xi’an plant will be Samsung's second largest memory chip manufacturing facility worldwide after Austin in the US. With production lines and supporting facilities it has a floor area of 448,000m2, and plans for a second phase could see this more than doubled.

The $7bn that Samsung has put into the Xi’an plant is its single biggest investment in China, which is the world’s largest market for NAND flash memory chips, accounting for about half the total.

Xi’an was selected as the site for the facility because water and power are 20 to 30 per cent cheaper than other cities in China, including waste water treatment. Labour costs are 40 per cent lower.

Samsung is the world’s largest producer of handsets, memory chips and televisions.