Samsung Electronics to invest $7 billion to boost China NAND chip output

A major new China investment by chip maker Samsung (SSNLF) is spotlighting just how important the market has become to the company, and South Korean companies in general, and how they are trying to play into Beijing's agendas to maintain their place at the table. That's become all the more important lately, as a disagreement between Beijing and Seoul has been costing South Korean companies business in China, as often happens when such political disputes spill out into the business sector.

This particular investment, totaling $7 billion, was obviously in the planning stages long before that dispute broke out earlier this year, involving Seoul's decision to install a sophisticated anti-missile defense system supplied by the US to counter the North Korean threat. But Samsung's decision to make its announcement now looks shrewd, as it should win its some goodwill from Beijing at a time when the company's smartphones face similar struggles in China that they're seeing in the rest of the world.

There are quite a few threads to this story, but at the center is South Korea's largest corporate citizen and China, one of its largest customers. The company has just announced it will invest the $7 billion to expand a NAND memory chip plant in the interior city of Xian, including an initial $2.3 billion tranche that has already been approved by the company's board.

All this comes as Samsung and Korean companies in general have been struggling in China over the last few months due to the political squabble, at least in terms of their customer products. Samsung as recently as two years ago was the largest smartphone player in China, the world's largest smartphone market. But lately it has dropped out of the top 5, meaning its share of the market has dropped below 7 percent.