Dow Chemical signed a memorandum of understanding with the governments of South Chungcheong Province and the city of Cheonan to build the factory for light-emitting diodes and display panel components in the city, 92 kilometers south of Seoul, the officials said.
Construction for the envisioned plant will begin in October for completion in 2015, they said.
Dow Chemical's investment plan came one month after the firm opened its organic light-emitting diode (OLED) electronic materials facility in Cheonan, a major city in the province.
"The city of Cheonan bears advantages in terms of geographical proximity and is well-equipped with infrastructure for our business," said Dominic Yang, vice president of Dow Electronics Material, the electronics business unit of Dow Chemical, in a signing ceremony. "I expect the investment to contribute to growth of both our company and the local economy."
Officials at the provincial government said Dow Chemical's investment is expected to boost the local economy by increasing employment and exports.
"The new facility will greatly contribute to vitalising the regional economy," Gov Ahn Hee-jung said. "The government will offer full support for the firm's smooth investment."
One of the world's leading chemicals makers, Dow Chemical produces some 5,000 kinds of key components for various electronics including computers and cell phones.
It posted US$45 billion in sales last year and employs more than 52,000 people in 37 countries.
