Samsung to invest $230 billion to further semiconductor manufacturing

An investment of $230 billion is expected to be made in the next two decades by Samsung to further semiconductor manufacturing.

The investment will be a part of a South Korean project to develop one of the largest semiconductor manufacturing hubs in the world, near its capital city of Seoul. Samsung leads in the production of memory chips, smartphones, and TVs in the world. 

The mega cluster, which will feature five new semiconductor plants built by Samsung, will be set in the Gyeonggi Province and is expected to be completed by 2042. According to South Korea’s Ministry of Trade, Industry, and Energy, the cluster is aimed to attract more than 150 firms involved in the design and production of chipsets. 

Samsung aims to expand its production capacities in both computer memory chips and logic chips designed for high-end applications like 5G technology, driverless cars, and AI-enabled systems. 

A masterplan for "key economic growth"

The announcement from the south-Asian country is part of its plan to develop six key industries which are crucial to further its export market, according to AP News.

In addition to semiconductors, others include rechargeable batteries, electric vehicles, robotics, displays, and biotechnology. Authorities are expecting to attract a total investment of around $422 billion by 2026.

The development comes as competing countries including the United States, China, India, and Japan are planning to ramp up their chip manufacturing facilities by offering tax breaks and infrastructural support.

Yoon Suk Yeol, the president of South Korea, in a session with business leaders and policymakers on March 15, highlighted the relevance of technology industries and described it as "key economic growth engines and security and strategic assets that are also directly linked to job creation and livelihoods.”

“We have 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,” said a statement from the South Korean Ministry of Trade.

The South Korean authorities have also announced an investment of $19.17 billion in the next five years to support research and development in advanced segments like AI. The country will spend $276 million of the total allocation to develop chip packaging techniques and $76 million to ensure basic essentials like electricity and water for the proposed factories. 

Falling demand for semiconductors in global markets

South Korea has reported that its semiconductor exports were down 41.5 percent to $6.1 billion year-on-year as it has "continued to fall in unit price and shipments as demand for ICT devices worldwide waned and memory unit prices dropped."

Memory chips recorded a fall of 53.9 percent to $2.9 billion and system chips were down 25.5 percent to $2.7 billion.

Samsung reported a 70 percent drop in profits for the three months through December, as prices of chipsets fell due to economic uncertainties. While the other major South Korean chipmaker, SK Hynix, reported a $1.3 billion loss in the same time period.