South Korean tech giant Samsung Electronics on Wednesday announced it expects to invest 300 trillion won ($230 billion) over the next 20 years to build what the country called the world's largest semiconductor manufacturing base, in line with efforts to boost the national chip industry.
Samsung's project is part of a private-sector investment plan unveiled by the government on Wednesday. Seoul's strategy aims to expand tax breaks and support to raise the competitiveness of high-tech sectors including those involving chips, displays and batteries.
The chip-making "mega cluster," which will be established in Gyeonggi Province near the capital Seoul by 2042, will be anchored by five new semiconductor plants built by Samsung. It will aim to attract 150 other companies producing materials and components or designing high-tech chips, according to South Korea's Ministry of Trade, Industry and Energy.
Samsung's new plants will be located near its existing domestic factories and will produce both computer memory chips used for storing data and higher-margin logic chips designed to perform a broader range of functions, the company said.
A giant in the global memory business, Samsung is trying to expand its presence in advanced chips, anticipating that demand will soar in coming years with the adoption of new technologies such as 5G wireless networks, artificial intelligence and self-driving cars.
The semiconductor cluster is part of broader government plans announced on Wednesday to promote six key technology industries the country sees as most crucial for its export-dependent economy. Apart from semiconductors, they include rechargeable batteries, electric vehicles, robotics, displays and bio-technology. The government hopes to draw 550 trillion won ($422 billion) in corporate investment on those projects through 2026.
South Korea's plan comes as other technology powerhouses, including the United States, Japan and China, are building up their domestic chip manufacturing, deploying protectionist measures, tax cuts and sizeable subsidies to lure investments.
"The economic battlefield, which recently began with chips, has expanded. Countries are providing large-scale subsidies and tax support," said South Korean President Yoon Suk Yeol on Wednesday.
In a meeting with economic policy-makers and business leaders, Yoon described technology industries as the country's "key economic growth engines, and security and strategic assets that are also directly linked to job creation and livelihoods."
"(We) must support private investments to ensure further growth. The government must provide location, research and development, manpower, and tax support," he noted.
"(South Korea) has world-class manufacturing capabilities and technologies in various high-tech industries such as semiconductors, secondary batteries, and displays, but (government) support and regulatory conditions have been insufficient,” the Trade Ministry said in a statement.
In January, the government proposed raising the tax deduction rate for facility investments in chips and other strategic technologies from 8% to 15% for large corporations.
Separately, Samsung Electronics, unit Samsung Display, affiliates Samsung SDI and Samsung Electro-Mechanics said they plan to invest 60.1 trillion won in the next 10 years in regions outside the Seoul metropolitan area to develop chip packaging, displays and battery technology.
Samsung, South Korea's biggest company, has seen its profit plummet in recent months as a weak global economy, rattled by Russia's war on Ukraine and high inflation, depressed demand for its consumer electronics products and memory chips. The company's profit for the three months through December fell nearly 70%, partially because chip prices fell sharply as clients adjusted their inventories to reflect economic uncertainties.
SK Hynix, another major South Korean chipmaker, reported an operating loss of 1.7 trillion won ($1.3 billion) for the October-December period, which marked its first quarterly deficit since 2012.
South Korea, home to the world's two biggest memory chip makers, Samsung Electronics and SK Hynix Inc, is seeking to improve supply-chain stability to become a major player in the non-memory chip field, currently dominated by chipmakers such as Taiwan Semiconductor Manufacturing Co Ltd. (TSMC) and Intel Corp.
