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Samsung doubles 2010 capex to $16 bn

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CIOL Bureau
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SEOUL, S.KOREA: Samsung Electronics, the world's largest memory chip maker, said on Monday it would double this year's capital spending to a record $16 billion mainly to boost capacity of semiconductor and flat screens.

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Samsung, which previously said it would spend at least 8.5 trillion won this year, said 2010 capex would rise to 18 trillion won ($15.93 billion) due to indications that global consumer electronics and IT industry markets were improving.

"Although the global economic environment and business conditions remain changeable and uncertain, if we invest aggressively in expanding facilities... these circumstances also present Samsung with an opportunity for future growth," Samsung chairman Kun-Hee Lee said in a statement.

Samsung, also the world's top maker of liquid crystal displays (LCD), plans to invest 11 trillion won in semiconductors and 5 trillion won in LCDs from 3 trillion won now.

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The South Korean firm also started building a new chip plant on Monday, which would mark the first construction of its kind in Korea in five years, after shunning expansion due to the industry's worst downturn.

Total investment in the new line, which will start production from next year, will amount to 12 trillion won.

The company will also start building a new LCD line, betting increasing demand for large-sized LCD TV panels.

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Samsung said its chairman plans to meet Sony CEO Howard Stringer on May 24 in Seoul, amid market talk that they would discuss expanding LCD supply to Sony at the Japanese firm's request.

As the chip sector recovers, spurred by stronger-than-expected demand from China and booming sales of memory heavy devices such as smartphones and tablet PCs, companies are gearing up to increase investment, threatening to derail the rebound.

Toshiba Corp, the world's No.2 maker of NAND-type flash memory chips after Samsung, said this week it would boost capital spending, mainly in its chip and infrastructure businesses.

Samsung competes with home rival Hynix Semiconductor, Japan's Elpida Memory, and Micron Technology of the United States in computer memory chips and with LG Display and AU Optronics in flat screens.

Shares of Samsung, Asia's most valuable technology firm, fell 3.5 per cent to 781,000 won, versus a 2.9 per cent drop in the wider market .KS11.

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