Samsung has announced that it will invest 300 trillion Korean won in a latest semiconductor manufacturing facility in South Korea over the next twenty years. This is an element of a broader South Korean government technology investment plan.
Seong Joon Cho | Bloomberg | Getty Images
Samsung electronics said on Wednesday it plans to speculate 300 trillion Korean won ($228 billion) in a latest semiconductor complex in South Korea, which the government says will be the largest in the world, as a part of the country’s aggressive bid to take the lead in critical technologies.
The investment will proceed for years until 2042, a Samsung spokesman told CNBC.
The South Korean government desires to mix its biggest tech corporations to spur development in key areas. The federal government said Wednesday that by 2026, the private sector will invest 550 trillion won in areas comparable to chips, displays, batteries and electric vehicles.
But the foremost focus is on semiconductors – critical components that go into every thing from smartphones to cars – and that are increasingly becoming a geopolitical focus. South Korea’s expansive move is seen as a technique to meet up with American aggressive chip investments.
“President Yoon Suk-yeol said that although it is crucial for high-tech industries comparable to semiconductors to develop in the medium to long-term plan, we want to implement these plans quickly as if it were a matter of life and death given the current global situation competition,” spokesman Yoon Lee Do-woon said at a briefing.
The brand new 300 trillion-won chip complex that Samsung is constructing will be situated just outside South Korea’s capital, Seoul.
The South Korean government intends to mix chip production facilities in the area from Samsung to other corporations to create a “semiconductor mega cluster”. The thought is to attach different parts of the semiconductor supply chain, from chip design to manufacturing.
“When choosing latest locations, we took into consideration the synergies that might be seen in existing semiconductor clusters,” said Lee Chang-yang, South Korea’s Minister of Trade, Industry and Energy.
The South Korean government said the corporations would construct five chip manufacturing facilities in the cluster.
Samsung is the world’s largest manufacturer of memory chips. These are semiconductors that go into devices comparable to laptops and servers. South Korea can be home to SK Hynixthe second largest manufacturer of memory chips.
Semiconductor competition is intensifying
Semiconductors have turn into a highly politicized technology and have created a fancy dynamic between allied countries driven by a dual US strategy.
On the one hand, Washington has pushed to bring chip production back to US shores and has received commitments from corporations including Samsung and Taiwan’s TSMC, the largest contract chipmaker, to construct factories.
The USA, on the other hand, tried to stop the development of semiconductors in China. Washington introduced sweeping rules last 12 months designed to chop off China from sourcing or producing key chips and components and the tools needed to make them.
In its tech battle with China, the US sought to forge alliances with South Korea, Japan, Taiwan and the Netherlands to assist cut China off from key technologies.
But at the same time, the US signed the Chips and Science Act, which incorporates $52 billion in support for chip corporations to draw investment to America and strengthen the country’s position in the semiconductor industry.
This has created a competitive landscape between allied nations, whilst they seek partnerships.
“Currently, each country is attempting to construct its own competitive strength. There may be a flood of tax breaks and capital obligations from governments searching for to provide semiconductors on land,” Pranay Kotasthane, chair of the high-tech geopolitics program at the Takshashila Institute, told CNBC.
“The impulse to compete is stronger than the impulse to cooperate. Incentives may change if planned incentives don’t work or if the semiconductor industry experiences a downward trend in the investment cycle.“
Samsung production pressure
In the case of Samsung, government support could help it meet up with TSMC, the largest contract chipmaker. TSMC produces a few of the world’s most advanced semiconductors for corporations like Apple.
Samsung, known for its consumer electronics and memory chips, is seeking to speed up its contract chip production or foundry business.
In October, the company unveiled an ambitious plan to provide the world’s most advanced chips by 2027.
Samsung shares closed 1.3% higher in South Korea on Wednesday after announcing its chip investment plans.