Jan 23, 2014

Samsung Electronics hauling mass semiconductor facility/equipment to new Xian factory

Semiconductor factory that is currently being built by Samsung Electronics at Xian (photo taken in July 2013)

[Shanghai Bureau]
South Korea's Samsung Electronics Co. is now actively moving equipment to the semiconductor factory that it is now building in Xian city in China's Shaanxi province. Construction at the facility began in the middle of 2012 and according to multiple local related sources, equipment and machines have started to be transported prior to China's National Day in October last year. The volume of equipment initially moved to the site was said to exceed 5,000 tons. A local logistics-affiliated source explained that, "The (Xian-bound) machines are consolidated at Incheon Airport from all over the world, centering on Asia, and then hauled by dedicated planes to Xian from Incheon." It seems that South Korean- and Chinese-affiliated airlines are operating chartered flights for Samsung. Meanwhile, an entity affiliated with the semiconductor industry in China said that, "The construction of the production line is due to be completed in June and the machines that have been installed early on will become partially operational by as early as around March this year. The plan is to haul the equipment and cargoes to Xian through more than 100 flights," indicating that the transport of massive volumes of cargoes to the new facility will continue until the full-fledged operation of the factory this June.

Samsung China Semiconductor, Samsung Electronics' local subsidiary in China, is currently building a factory for NAND flash memory chips in Xian. Located at the Xian High-Tech Area Comprehensive Bonded Zone at the southwestern portion of Xian city, the facility will be a large-scale production base with an initial investment of about $2.3 billion (around Y230 billion) and a total investment of $7 billion (about Y720 billion). Phase 1 of the complex, which will account for about a third of the entire plan, will be construction on an area of around 360,000 sqm. Local newspaper reports claimed that, "This will become China's biggest foreign-funded investment in the electronics and information industry since the start of the launch of the country's reform and door-opening initiative. The influx of 160 supplier companies is expected going forward."

A semiconductor industry-affiliated source in China said that, "The factory will manufacture the NAND flash memories of 300mm wafers that use 3D design. The next-generation product with improved memory capacity and information processing capability will be utilized in smart phones, USBs, digital cameras, slim-type laptops and other digital devices. Now aside from Samsung's own factory in Suzhou (Jiangsu province), the products that will be produced at the new factory are expected to be shipped to manufacturers of these devices and products worldwide."

The equipment that was delivered prior to the operation of the factory seems to be machines related to manufacturing semiconductors that partially incorporate locally produced parts and materials. It is likely that a large chunk of the machines will first be consolidated at Incheon, which is a foothold of Samsung, from their manufacturers from all over the world. Products from inside Asia will be particularly big in volume and the ex-Japan equipment will be entrusted to major Japanese-affiliated forwarders and then transported to South Korea by sea.

The first chartered flight from Incheon carrying the equipment bound to Xian is believed to have reached the local site at around the end of September last year. The volume of such cargoes reportedly stood at around 5,500 tons initially, according to a local logistics provider-affiliated source, who also disclosed that, "There are days when 2-3 flights, or even four flights of freighters at most, come into Xian."

"If we take into account the time when the machines get to the factory and then assembled, up to the time the production lines are built, then it would be around June when all processes are completed. The machines that were brought in early on are slated to kick off operation one after another starting March this year," said a source affiliated to the semiconductor industry. While construction works will stop during the New Year holidays and the Chinese Lunar New Year starting the end of January, it is believed that the transport of equipment will continue until the full-fledged operation of the factory in June. Now as for the land transport of the equipment upon arrival at the Xian Airport, it is apparently entrusted to a local logistics firm and also a major Japanese-affiliated forwarder.

Several local logistics industry-affiliated sources said that, "Majority of the suppliers are believed to be Japanese-affiliated entities (including those that have investments from Japanese-affiliated subsidiaries in China, South Korea and Taiwan)." It is expected that the influx of suppliers will shift to high gear from here on toward the factory's full-fledged operation and the local government is expanding the area of the Xian High-Tech Area Comprehensive Bonded Zone, where Samsung's factory is being built, by about five folds in order to more adequately accommodate Samsung. It is also developing highways and other roads that will directly link the bonded zone to the airport.

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