European chipmaker interested in building Hynix plant.

Byline: From Register-Guard and news service reports

STMicroelectronics NV, Europe's largest chipmaker, may help South Korea's Hynix Semiconductor Inc. build a memory-chip plant in China, the world's fastest-growing semiconductor market, Hynix said.

STMicroelectronics expressed interest in participating in the project, Hynix Chief Financial Officer Chung Hyung Ryang told Bloomberg News. He said talks have not progressed and he declined to comment on a Korea Economic Daily report that the venture would cost $1.7 billion.

Last year, companies in China bought $19.2 billion worth of chips for products such as mobile phones, and demand is expected to grow 41 percent this year.

Franco-Italian STMicroelectronics and Icheon-based Hynix need to invest to make more chips at lower cost to keep up with rivals.

``Considering how good China looks as an investment spot, the idea for both companies to team up seems to make sense,'' said Jeon Woo Dong, a manager at KB Investment Trust Management Co. in Seoul.

Hynix has a dynamic random access memory chip plant in west Eugene that employs about 900 people, plus about a dozen chip plants in South Korea. The companies are considering a plan to build a $1.7 billion chip plant in China to make memory chips from 12-inch wafers, according to the Korea Economic report. STMicroelectronics and Hynix would each spend $500 million on the plant with China paying the rest, the report said.

Hynix, which last month said it planned to build a Chinese factory next year, doesn't make chips on the larger 12-inch wafers that the industry is shifting to. At its Eugene and South Koreans plants, Hynix makes chips on wafers 8 inches in diameter.

Making chips on larger wafers allows companies to produce more chips at a time and at less unit cost.