Mobile phone and computer chip giant Samsung Electronics has announced a major investment in its memory chip business.

Samsung said it will invest 1.5 trillion won ($1.2bn; �745m) in building new semiconductor facilities next year.

Samsung's strategy is to see off a downturn in the semiconductor industry by stepping up its investment in top-of-the-range technology.

The company said it would expand its ability to produce 12-inch silicon wafers, which turn out twice as many memory chips as 8-inch ones.

Confident style

"The move is to cut costs and to churn out memory chips by advancing employment of 12-inch silicon wafers," the Korean technology giant said in a statement to the Seoul stock exchange.

Samsung is the world's number one producer of memory chips and ranks third among mobile phone makers, with 10% of the global market.

Although both sectors are struggling with depressed markets, Samsung achieved a 400% rise in profits for the three months to the end of September 2002, helped by strong sales of camera phones.

It demonstrated confidence in its ability to defend its market position back then by raising the price of its most advanced memory chips, known as double data rate DRAM. (DDR DRAM).

Samsung's strategy is to increase the proportion of top-end chips in its output.

Brighter 2003?

Technology analysts have spotted signs of a recovery in the struggling chip industry, which was rocked by the first drop in sales in its history during 2001.

Sales fell by one third in 2001, but have recovered to grow by an unspectacular 1.4% in 2002, according to research firm Dataquest.

Forecasts for 2003 predict growth of between 5% and 10%.

Samsung's posted net profits of 1.73 trillion won ($1.4bn: �900m) in the third quarter of 2002, up from 420bn won a year earlier.