Samsung Electronics has begun work on the sixth domestic contract chip production line, the company said on Thursday, to make logic chips for mobile phones and computers as it cuts reliance on the volatile memory chip sector.

South Korean firm taking big rival Taiwan Semiconductor Manufacturing (TSMC) In the contract manufacturing business, where it competes for orders from customers such as Qualcomm.

“This new production facility will expand Samsung’s manufacturing capabilities,” the company said in a statement on Thursday.

Samsung It is targeting the second half of next year to begin production of advanced 5 nanometer chips using highly ultraviolet (EUV) technology, on an additional line at its plant in the city of Pyongtak, within a two-hour drive from the capital Seoul.

“This is Samsung’s attempt to narrow the gap with TSMC, as it still lags behind TSMC in the contract chip making market,” said Park Sung, an analyst at Cape Investment and Securities.

TSMC, the world’s largest contract chipmaker, Plan to make The US state of Arizona has a $ 12 billion (about Rs 90,660 crore) factory, it said last week.

Samsung now operates five foundry lines in South Korea and one in the United States.

Last year, Samsung said it planned to invest KRW 133 trillion (about Rs 8.16 lakh crore) in non-memory chips through 2030, including KRW 73 trillion (about Rs 4.48 lakh crore) which is domestic. R and D and KRW won 60 trillion (approx). 3.68 lakh crores for production infrastructure).

This month, President Moon Jae-in said he aimed to nurture the non-memory industry in his agenda to promote economic growth.

South Korea’s chip exports for the first 20 days of May rose 13.4 percent, while mobile devices and cars exports fell by 11.2 percent and 58.6 percent, respectively, customs data showed.

© Thomson Reuters 2020