Samsung To Invest $4 Billion In iPhone, iPad Chip Plant In Texas

Samsung today announced that it will be investing $4 billion in its Austin, Texas based semi-conductor plant to expand the production capacity of silicon chips to meet “rapidly growing” industry demands.

Samsung produces A5 and the A5X SoCs used in present generation iOS devices like the iPhone 4S and the new iPad at the plant.

From Samsung’s Press Release:

The [$4 billion] funds will be used to renovate its existing fabrication operations to accommodate full System LSI [large system integration] production.

The remodeled fabrication line will mainly produce state-of-the-art mobile SoCs on 300mm wafers at the 28nm process node.

Starting work this month, the project is scheduled to initiate mass production within the second half of 2013. About 2,500 construction workers and equipment vendors will be at the site to retrofit the facility and set up the equipment.

This is a part of Samsung’s shift from merely being a memory chip manufacturer to producing low-power processors that are a key part of modern mobile devices. An analyst, speaking to Bloomberg, notes that such processors are much more profitable than memory chips, offering another reason behind Samsung’s shift in strategy.

Demand for low-power processors is mainly fuelled by Samsung’s own thriving smartphone business, as well as Apple’s huge shipment numbers for iOS devices. The upcoming iPad mini and new iPhone are expected to further increase this demand.

A Reuters report published back in December noted that nearly all of Samsung’s non-memory chip production in the Austin plant is dedicated to producing chips for Apple devices.

Although Apple and Samsung appear to be working well on the business front, their legal departments are embroiled in patent disputes in various locations all over the world. Despite such a mutually beneficial relationship being at stake, CEOs of both companies, even after multiple rounds of discussions, couldn’t resolve their disputes.

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