SEOUL (AFP) - South Korean chipmaker Hynix Semiconductor said its board of directors approved a plan to invest 230 million dollars in expanding operations in China this year.

A new Hynix-owned business entity will be launched to boost chip production at a joint venture plant under construction in Wuxi in China's eastern province of Jiangsu, Hynix officials said.

Hynix, the world's second largest memory chipmaker, and European giant STMicroelectronics, are to open the two billion dollar plant, Hynix-ST Semiconductor, in Wuxi this year.

"The new investment is to be used to launch a new unit, Hynix Semiconductor Wuxi, to increase production more than planned by the joint venture at the plant in China," Hynix spokesman Kim Ah-Young told AFP.

She made the comment to clarify an earlier statement that said Hynix would build a new plant.

Hynix has been looking at China as a new production base to help the company defuse a trade row over its chip exports and boost earnings.

The South Korean company has been hit by punitive tariffs in the

Hynix was rescued in December 2002 by a multi-billion-dollar bailout arranged by South Korean creditors, some of whom were state-controlled.

Hynix officials told AFP Thursday that the Hynix-STSemiconductor plant would begin mass production as early as July in 2006. Hynix owns 67 percent of the joint venture while STMicro controls 33 percent.

Hynix and STMicroelectronics agreed to invest 500 million dollars each in the joint venture, with the local Chinese government and financial institutions to put up one billion dollars.

"We expect to start mass-producing new products on the eight-inch (200 millimetre) wafer line in July and on the advanced 12-inch (300 millimetre) wafer line in December," a Hynix official told AFP.

Hynix posted a net profit of 1.85 trillion won (1.9 billion dollars) in 2005, up seven percent from a year earlier, on 5.9 trillion won in sales.