Samsung said it will invest 300 trillion won in building new semiconductor factories in South Korea over the next two decades. This is part of the South Korean government’s broader technology investment plan.
Sung Joon Cho | Bloomberg | Getty Images
Samsung Electronics said on Wednesday it plans to invest 300 trillion won ($228 billion) in a new semiconductor complex in South Korea, which the government says will be the world’s largest, part of the country’s aggressive push to lead in key technologies part.
A Samsung spokesperson told CNBC that the investment will continue until 2042.
The South Korean government is looking to unite its biggest tech companies to boost development in key sectors. The private sector will invest 550 trillion won in areas including chips, displays, batteries and electric vehicles by 2026, the government said on Wednesday.
But the focus is on semiconductors — key components of everything from smartphones to cars — and are increasingly at the center of geopolitics. South Korea’s expansion moves are seen as a way to catch up with the United States’ own aggressive chip investments.
President Yoon Suk-yeol said it is important for high-tech industries such as semiconductors to achieve growth through mid- to long-term plans, but we must move forward with these plans as quickly as a matter of life and death, given the current state of global competition,” Yoon’s spokesman Lee Do-woon said in a briefing.
The new 300 trillion won chip complex that Samsung is building will be located outside the South Korean capital Seoul.
The South Korean government aims to link chip facilities in the region from Samsung to other companies to create a “semiconductor mega-cluster”. The idea is to connect all parts of the semiconductor supply chain, from chip design to manufacturing.
“When selecting the new location, we considered the synergies of the existing semiconductor cluster,” said Lee Chang-yang, South Korea’s trade, industry and energy minister.
The South Korean government said companies will build five chip manufacturing plants within the cluster.
Samsung is the world’s largest maker of memory chips. These are semiconductors used in devices such as laptops and servers.Korea is also home SK Hynixthe second largest maker of memory chips.
Semiconductor competition heats up
Fueled by America’s dual strategy, semiconductors have become a highly politicized technology with complex dynamics among allies.
On the one hand, Washington is pushing to bring chip manufacturing back to U.S. soil, and has secured commitments from companies including Samsung and TSMC, Taiwan’s largest foundry chipmaker, to build factories.
On the other hand, the United States tried hinder China’s semiconductor development. Last year, Washington introduced cleaning rules The aim is to cut off China’s access to or manufacture of critical chips and components, as well as the tools needed to make them.
In tech war with China, U.S. seek an alliance Work with South Korea, Japan, Taiwan, and the Netherlands to help cut China off from critical technologies.
But at the same time, U.S. Signs Chips and Science Act That includes $52 billion to support companies that make chips to attract investment to the U.S. and boost the country’s standing in the semiconductor industry.
This creates a competitive landscape among allies even as they seek partnerships.
“As of now, each country is trying to build its own competitive advantage. Governments seeking onshore semiconductor production have offered substantial tax breaks and capital commitments,” Pranay Kotasthane, chair of the High-Tech Geopolitics Program at the Takshashila Institution, told CNBC.
“The urge to compete is stronger than the urge to cooperate. Incentives may change if planned incentives don’t work, or when the semiconductor industry sees a downturn in the investment cycle.“
Samsung manufacturing push
For Samsung, government support could help it catch up with TSMC, the largest contract chipmaker. TSMC Produces the world’s most advanced semiconductors for companies like Apple.
Samsung, best known for consumer electronics and memory chips, is looking to expand its contract chipmaking, or foundry, business.
In October, the company laid out an ambitious roadmap to Manufacture the world’s most advanced chips by 2027.
Samsung shares closed up 1.3 percent in South Korea on Wednesday after announcing its chip investment plan.