Samsung Electronics Co. (005930.SE) plans to invest $3.6 billion to expand its semiconductor plant in Austin, Texas, as it closes in on the title of world's largest technology manufacturer.
The investment in the Austin campus, the memory-chip designer's only semiconductor manufacturing plant located outside South Korea, will build out the second phase of the company's 2.3-million-square-foot semiconductor complex, adding 500 new jobs and including a research and development facility.
Samsung, which makes a wide range of products from semiconductors to TVs and mobile phones, is coming off its biggest-ever quarterly profit, helped by a rebounding chip business that's surging after years of oversupply. Last month, the company said it would more than double its capital spending on new factories and equipment to a record $15.6 billion this year.
The expanded Austin plant will produce advanced logic devices. Currently, the plant produces a variety of NAND flash memory chips used in products like music players and digital cameras.
With its manufacturing expansions, Samsung is on pace to top Hewlett-Packard Co. (HPQ) as the largest maker of technology products by revenue later this year. It is currently the world's second-largest semiconductor maker, after Intel Corp. (INTC).
The Austin area has in recent years seen its semiconductor manufacturing industry move overseas. The number of factories operating in the area has shrunk to four from as many as 13, as companies looked to cheaper operations abroad, said Dave Porter of the Austin Chamber of Commerce.
"On a local level, it's a great investment," Porter said. "It solidifies Samsung's footprint in Austin."
Samsung will have invested more than $9 billion in Austin with its latest factory expansion. The company, which began construction of its first plant in Austin in 1996, said last year that it would upgrade the aging plant to expand its production of flash memory.
The company has since stopped operation of a production line for dynamic random access memory, or DRAM, which it first built in 1997. The action led to about 500 job cuts at the site, though some of those employees have since been rehired.
Employment at the Austin site is expected to grow by about 500 employees to 1,500 by 2011, boosting annual payroll by half to about $105 million, Samsung said. Most of the new employees will be engineers and technicians.