Samsung to build $1.9 billion logic chip line

Students walk out of a showroom at the headquarters of Samsung Electronics in Seoul October 28, 2011.

SEOUL (Reuters) - Samsung Electronics Co, the world's No.2 chipmaker, said it will spend $1.9 billion to build a new logic chip line to make processors for mobile devices as demand grows for smartphones and tablets.

Samsung, which makes application processors for Apple's iPhone and iPad - which rival its own Galaxy and Note devices - said the new line will use 300 mm wafers and 20 nanometer and 14 nanometer processing technology.

The South Korean firm is aggressively pumping up production of logic chips, as growth in the mobile device market outpaces weak computer sales. Demand for system chips used in smartphones and tablets is set to more than double to $59 billion in 2016 from $23 billion last year, according to research firm Gartner.

In a statement, Samsung said the new line - which it hopes to complete by the end of next year - would help meet growing demand for "smart mobile solutions".

The investment plan follows Samsung's recent decision to build its first chip manufacturing plant in China to make NAND type flash memory chips, which analysts estimate will cost some 4-5 trillion won ($3.4-$4.2 billion).

Ahead of the announcement, shares in Asia's biggest technology firm closed up 5.2 percent in a broad market rally that sent the benchmark KOSPI index up 2.6 percent.

($1 = 1180.1250 Korean won)

(Reporting by Miyoung Kim; Editing by Ian Geoghegan)