Samsung to invest in South Korea mega chip-making plan

• Posted on March 15, 2023March 15, 2023
• by Nana Kwesi Coomson
• Comment

Electronics giant Samsung says it plans to invest around 300tn won ($230.8bn; £189.6bn) over 20 years in the South Korean government’s push to develop a mega semiconductor hub in the country.

This will be put towards building five chip factories, the firm told the BBC.

Samsung is the world’s biggest maker of memory chips, smartphones and TVs.

Under the official plan, companies in high-tech industries will be offered incentives like expanded tax breaks and infrastructure support.

“The mega cluster will be the key base of our semiconductor ecosystem,” South Korea’s Ministry of Trade, Industry and Energy said in a statement on Wednesday.

It said it planned to secure around 550tn won in private-sector investment and “leap forward as a leading country in the middle of fierce global competition over advanced industries”.

South Korea’s move comes as “major players are ramping up efforts to boost onshore manufacturing in the semiconductor sector,” Paul Triolo from the global advisory firm Albright Stonebridge Group told the BBC.

“It wants to emulate to some degree Taiwan’s clustering effect, where the trifecta of science parks… form a massive cluster that has attracted numerous other companies, both upstream and downstream in the supply chain,” he said.

Semiconductors, which power everything from mobile phones to military hardware, are at the centre of a bitter dispute between the US and China.

In October, Washington announced that it would require licences for companies exporting chips to China using US tools or software, no matter where they are made in the world.

Last week, the Netherlands said it also planned to put restrictions on its “most advanced” microchip technology exports to protect national security.

Around the same time, South Korea’s trade ministry raised concerns over the US policy on semiconductors.

The ministry said the Chips Act “could deepen business uncertainties, violate companies’ management and technology rights as well as make the United States less attractive as an investment option”.

China has frequently called the US a “tech hegemony” in response to export controls imposed by Washington.

South Korea is home to other major microprocessor manufacturers such as SK Hynix.

-BBC