Samsung plans to invest $220 million in a new semiconductor production line at its existing facility in Austin, Texas.

The new line will focus on production of memory chips for the North American market. Samsung is a major manufacturer of both DRAM (dynamic RAM) chips for personal computers and NAND flash memory chips that are used in memory cards and a wide range of consumer electronics products.

Production is due to begin in the third quarter of 2007 and Samsung hasn't yet decided which of the two memory technologies will be first off the manufacturing line, said Kim Il Ung, vice president of Samsung's semiconductor business. Samsung will look at market demand at the end of this year and make that decision, he said.

During the first three months of this year Samsung saw its memory chip sales decline 16 per cent, it said Friday. Price drops in NAND flash memory hit results although a quicker than expected adoption of DDR2 (double data rate, second generation) memory by PC makers helped its memory business.

For the remainder of 2006 Samsung said it expects to see demand for DRAM chips increase 45 per cent over 2005 as computer makers put more memory into new systems. The average amount of memory in computers was 705Mb during the first quarter compared to 552Mb in the same period last year.

The flash memory market is expected to benefit from greater demand due to the lower prices and the planned launch of portable media players and MP3 music players that pack as much as 8GB of memory, the company said. Consumers are also expected to buy higher capacity flash memory cards for their digital cameras.