Samsung Elec sees strong year for chip and components unit - CEO

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The logo of Samsung Electronic is seen at its headquarters in Seoul, South Korea, April 4, 2016. REUTERS/Kim Hong-Ji

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SEOUL, March 16 (Reuters) - Samsung Electronics Co Ltd (005930.KS) expects its chip and components division to perform strongly this year as it looks to boost supply by improving operations in a tight global market, the company's new co-chief executive said on Wednesday.

The chip and components business is expected to outperform the global chip market's forecast annual growth of 9%, division head and new co-CEO Kyung Kye-hyun told the annual shareholders meeting, without giving further details.

Kyung said Samsung's foundry business would look for new clients in China, where it expects high market growth, and focus on increasing supply capacity by improving operations at its plants.

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The tech giant will also improve its responsiveness in producing made-to-order chips in growth fields such as high-performance computing and artificial intelligence (AI), he said.

Responding to a shareholder question about low yields for the foundry business's cutting-edge, 5-nanometre or less chips, Kyung said the initial ramp-up took time but operations are showing a gradual improvement.

"As the process becomes finer, the complexity increases, and processes concerning 5-nanometres or less (chips) are approaching the physical limit of semiconductor devices," he said.

Samsung aims to improve both profitability and supply by optimising line operations and continuously improving processes already in mass production, he added.

A global tightness in chips and components supply, due to limited production capacity coupled with a boom in demand for chips used in everything from smartphones to cars, is driving investments by governments and chipmakers.

However, new production lines being planned now won't come online for several years. read more

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Reporting by Joyce Lee; editing by Richard Pullin

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