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Samsung to spend $228 billion on world’s biggest chip facility as part of South Korea tech plan

WorldAsiaSamsung to spend $228 billion on world's biggest chip facility as part of South Korea tech plan
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Samsung said it will invest 300 trillion Korean won over the next two decades in a new semiconductor facility in South Korea. It is part of a wider technology investment plan by the South Korean government.

Seongjoon Cho | Bloomberg | Getty Images

samsung electronics said on Wednesday it plans to invest 300 trillion Korean won ($228 billion) in a new semiconductor complex in South Korea that the government says will be the world’s largest, which will develop critical technologies. as part of an aggressive push by the country to take the lead in

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A Samsung spokesperson told CNBC that the investment would last until 2042.

The South Korean government is looking to partner with its biggest technology companies to drive development in key sectors. The government said on Wednesday that 550 trillion won will be invested by the private sector by 2026 in sectors including chips, displays, batteries and electric vehicles.

But the bigger focus is on semiconductors – the critical components that go into everything from smartphones to cars – and which have increasingly become a geopolitical focal point. South Korea’s expansionist move is seen as a way for the US to catch up to its aggressive chip investments.

“Chairman Yoon Suk-yeol said, although it is important for the development of high-tech industry such as semiconductors through mid- to long-term planning, we should pursue these plans rapidly as if it is a matter of life and death. , given the current state of global competition,” Yoon’s spokesman Lee Doo-woon said at a briefing.

The new 300 trillion won chip complex that Samsung is building will be just outside Seoul, the capital of South Korea.

The government of South Korea aims to add chip facilities from Samsung to other companies in the region to form a “semiconductor mega cluster”. The idea is to connect different parts of the semiconductor supply chain, from chip design to manufacturing.

“In selecting new locations, we have taken into account the synergy effect that can be seen from existing semiconductor clusters,” said Lee Chang-yang, South Korea’s Minister of Trade, Industry and Energy.

The South Korean government said the companies would build five chip manufacturing facilities in the cluster.

Samsung is the world’s largest memory chip maker. These are the semiconductors that go into devices like laptops and servers. South Korea is also home SK HynixSecond largest memory chip maker.

Semiconductor rivalry heats up

Semiconductors have become a highly political technology and have created a complex dynamic between allies, driven by the US’ dual strategy.

On the one hand, Washington has pushed to bring chip manufacturing back to US shores and has secured commitments from companies including Samsung and Taiwan’s TSMC, the largest contract chip maker, to build factories.

On the other hand, the US has demanded Stop China’s semiconductor development, Last year, Washington introduced comprehensive rule The goal is to cut China off from obtaining or manufacturing the core chips and components and the equipment needed to make them.

In its technological battle with China, the US has appear to combine Along with South Korea, Japan, Taiwan and the Netherlands to help China move away from the key technology.

but at the same time, America signed the Chips and Science Act That includes $52 billion in support for companies making chips to attract investment to the US and boost the country’s position in the semiconductor industry.

This has created a competitive landscape among allied nations even as they seek partnership.

“Up until now, every country has been trying to build its own competitive edge,” said Pranay Kotasthane, chair of the High-Tech Geopolitics Program at the Takshashila Institution. Tax breaks and capital commitments came flooding in from governments seeking onshore semiconductor production Is.” told CNBC.

“The impulse for competition is stronger than the impulse for cooperation. Incentives may change if planned incentives do not work or when the semiconductor industry sees a downward trend in the investment cycle.,

samsung manufacturing push

For Samsung, the government’s support could help it catch up with TSMC – the largest contract chip maker. TSMC manufactures some of the world’s most advanced semiconductors for companies such as Apple.

Samsung, best known for consumer electronics and memory chips, is looking to ramp up its contract chipmaking, or foundry, business.

In October, the company laid out an ambitious roadmap Manufacturing the most advanced chips in the world by 2027,

Samsung shares closed 1.3% higher in South Korea on Wednesday after announcing chip investment plans.

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