The world''s largest memory chipmaker, Samsung Electronics Co. Ltd, today announced that it would invest $3.5 billion by 2008 in its chip plant in Texas to produce flash memory chips, while unveiling a new NAND flash memory production line at its 10-year old plant.

The Texas plant is Samsung''s only semiconductor plant outside South Korea and currently produces only DRAM chips, used in PCs.

In 2006 Samsung commenced building the NAND flash memory, which uses advanced 12-inch wafers, at the same plant. Flash memory is used in gadgets such as music players, cell phones and digital cameras.

Today''s announcement was the first disclosure by Samsung as to the total investment at its NAND facility, which will produce flash memory. Samsung''s NAND production line would begin operations in the second half of 2007, and output will be ramped up to 60,000 wafers per month by 2008.

Falling prices of dynamic random access memory (DRAM) chips due to increased supply have hit memory chipmakers, though NAND prices recently bottomed out and demand for the chips is growing.

Samsung is the world leader in both DRAM and NAND. Hynix Semiconductor Inc is ranked second in DRAM production while Japan''s Toshiba Corp is the second-largest NAND maker.

Hynix is expected to switch more capacity from DRAM to higher-margin NAND chips, while Toshiba Corp, which makes NAND, also plans to speed up its flash memory expansion plans and boost production capacity by 70 per cent by mid-2008.

While Samsung continues to focus on DRAM it has to boost its NAND production given Toshiba''s aggressiveness.

Analysts expect NAND chips to enable chipmakers to recoup in the second half of the year, as prices have rebounded recently due to expected global capacity constraints to meet demand from new applications, notably Apple''s computers powered by flash memory chips.