Chip prices have fallen by one-third in the past year

Samsung, the world's largest maker of memory chips, has suffered, as have its rivals, from falling prices for chips and the consumer electronics products that use them.

"We plan to transfer most of our domestic PC manufacturing operations to China by 2005 to cut costs," a spokesman for the South Korean chip maker said.

Growing numbers of IT manufacturers are opening plants in China, hoping its cheap, well-educated workforce can help them cut costs.

Price war

Falling prices for its products helped to wipe 41% off Samsung's profits for the April to June quarter of 2003 compared to the same period of 2002.

Rivals suffered from the trend too; Toshiba's losses doubled in the April-to-June quarter, while profits fell 22% at Matsushita, the maker of Panasonic branded goods.

Samsung said it would keep some PC manufacturing facilities in Korea to serve its home market.

Samsung is already manufacturing about one million PCs a year in China, half of its overseas output.

In 2002 it invested $538m to open liquid crystal display plant for PC screens in China's eastern city of Suzhou, near Shanghai.

PCs are made by Samsung's digital media division which accounts for about 20% of the group's sales. However that division also includes TV sets.