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Samsung slams down $1.9bn for mobile chip fab

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Memory and processor chip maker Samsung Electronics is plunking down 2.25 trillion Korean won (about $1.9bn) to beef up its chip-making capacity, and rumors are doing the rounds that it has tapped the head of its semiconductor ops to be the new CEO of the company.

In a brief statement, Samsung said that its management committee had authorized the $1.9bn investment, which will be used to buy equipment for a new production line that will etch chips using 20 nanometer and 14 nanometer processes onto 300 millimeter silicon wafers.

The new line, which will be built out in phases between now and 2014, will be used to make chips for smartphones and other mobile devices, although Samsung did not elaborate on what these might be. (And officially, Apple has never confirmed that Samsung makes the processors inside iPhones and iPads.)

Samsung just opened up a $10bn wafer baker in South Korea last September and in April of this year said it would shell out $7bn over the next several years for a 10 nanometer NAND flash facility in Xi'an, China. The company has spent $8.7bn since 1996 establishing a fab in Austin, Texas, and ramping it up. The speculation in April was that after a $3.6bn upgrade to the Austin facility in March 2010, Samsung was pondering a move into the nascent ARM server chip arena.

Concurrent with the investment in the new line, Reuters and the Wall Street Journal are both reporting that Kwon Oh-hyun, the executive who has run Samsung's chip operations for the past four years and who took over its display biz this year, was suddenly and unexpectedly named the new CEO at the consumer electronics and chip maker. Kwon will retain control over the Samsung components business and will also run corporate-wide operations, and Samsung was at pains to explain that it will continue to keep its components and electronics businesses separate so as to not make its chip customers jumpy.

Kwon replaces Choi Geesung, who has been CEO of the 165 trillion Korean won company (that's about $139bn) since the end of 2009. Choi, who built up Samsung's TV business to topple Japanese rival Sony from the dominant position, has been named head of Samsung Group's corporate strategy, working directly with chairman Lee Kun-hee. The Financial Times reports that Choi was asked to move into the corporate strategy position by Lee when the executive who had been in charge of overall strategy for the group had to leave to health reasons. ®

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