Chip cooperation with Samsung expands

The nation's top economic regulator signed an MoU with South Korea's tech behemoth Samsung Electronics Co Ltd for further cooperation, a month after it spoke to the company on chip price surge causing the government particular concern.

The memorandum of understanding signed on Friday focused on possible cooperation in chip making, artificial intelligence and semiconductor manufacturing, but has nothing to do with the price rises of storage chips, said an official with the National Development and Reform Commission.

Samsung's agreement with the Department of High-tech Industry will be positive for the industry, the official said.

The cooperation came after the NDRC spoke to the company in December after the prices of storage chips rose at an astonishing pace over the past 18 months, leading to complaints from mobile phone manufacturers.

Samsung, the world's largest chipmaker, was the major beneficiary of the price rise. The company confirmed on Monday that it has inked an agreement with the NDRC, without elaborating further.

"The NDRC had earlier signed an agreement with the company for three years, so the current move is only an extension of the same," said Wang Yanhui, secretary-general of the Mobile China Alliance.

The commission has yet to take any further steps on an antimonopoly review, but should the company be found to be engaged in such practices, the government may refer to the penalties issued by other nations, Wang said.

"Samsung's cooperation with the Chinese government will not have an effect on the price hikes of storage chips, which is determined by the relationship between supply and demand," said Roger Sheng, research director at consultancy Gartner Inc, adding that the government's aim is to attract more foreign investment and boost technical collaboration.

"We do not rule out the possibility of Samsung establishing a dynamic random-access memory chip unit in China in the future," said Sheng.

Currently, Samsung holds a monopoly position in the field of storage chips. It has built a NAND flash chip factory in Xi'an, Shaanxi province and plans to expand the manufacturing capacity with a $7 billion investment in the next three years.

Sheng added it is not likely that Samsung will transfer core technologies related to storage chips to China even if it invests in new factories here, and the domestic storage chip manufacturers still lag behind their South Korea competitor.