Samsung announced they will build a NAND memory chip plant in China, investing $7 billion in a multi-year deal. It will be the company's largest overseas chip production investment plan.

Samsung is building the plant due to demand from China, the world's second-largest economy (behind the U.S.), along with devices such as the iPhone and iPad.

The $7 billion will be invested over multiple years, including an initial investment of $2.3 billion.

"Samsung is boosting spending as demand for flash memory, used to store media including photos, videos and applications permanently, is expected to climb 49 percent in the five years to 2015, according to Englewood, Colorado-based IHS Inc," Bloomberg reported.

Based in Xi'an, Samsung said the investment was the largest the company has made in an overseas factory.

"Samsung Electronics of the Republic of Korea announced the same day that its new flash memory project chip project ... in Chinese Mainland is located in Xi'an Hi-Tech Industries Development Zone," the Investment Guide of Shaanxi revealed.

Xi'an, in West China, has competitive industries from IT to aerospace to biomedicine. Companies such as Qualcomm are also based in the region.

"Samsung['s] selection of Xi'an as project site will boost rapid development [of a] new generation [of] IT industry," Investment Guide added.

"A single factory of this size could be the largest in the industry. For NAND flash, China will be a key production site, along with Korea," Seo Won Seok, analyst at Korea Investment and Securities Co., said while speaking to Bloomberg.

Samsung said in December it was building a plant in China - the world's most populous country - because the country is growing as a key chip maker.

"Competing chip makers, including Tokyo-based Elpida Inc., are losing money after the price for DRAM chips ... reached a record low," Bloomberg add.

Samsung also opened a new factory in South Korea in September. The facility is worth $10.6 billion and is the industry's largest, producing DRAM and NAND flash chips.

Construction of the Chinese facility will begin this year, with the aim to the produce NAND chips by 2013. NAND flash chips are generally used for digital cameras and smartphones.

Samsung also has a semiconductor plant in Austin, Texas, producing memory and logic chips. This includes processors used in mobile phones. The facility was running at full capacity five months after construction began, in October.

(reported by Jonathan Charles, edited by Surojit Chatterjee)