Korea vows to build world's largest semiconductor supply chain by 2030

[Photo by Lee Chung-woo]

South Korea has unveiled a bold plan to build the world’s biggest semiconductor supply chain by 2030 by attracting more than 510 trillion won ($450 billion) investment from the private chip sector including Samsung Electronics and SK hynix with the state’s generous tax incentives and relaxed regulations.

The plan called "K-Semiconductor Belt" announced by President Moon Jae-in during his visit to Samsung Electronics’ chip production base in Pyeongtaek on Thursday aims to sharpen Korea’s competitive edge in the global semiconductor industry and localize key chip materials and equipment supplies with major semiconductor companies and their suppliers working in clusters amid a global chip shortage.

The government will encourage companies in the semiconductor industry led by Samsung Electronics and SK hynix to invest more than 510 trillion won in the state’s K-Semiconductor initiative by 2030 by providing them massive tax incentives – 40 to 50 percent tax breaks for investments in chip R&D and 10 to 20 percent tax benefits for facility investments – and cheap loans, as well as relaxing regulation in technology development and manufacturing.

Under the K-Semiconductor plan, the world’s No. 1 memory chip maker Samsung Electronics will expand system semiconductor investments planned by 2030 from 133 trillion won to 171 trillion won and speed up investments in advanced facilities, said Kim Ki-nam, head of Samsung Electronics’ Device Solutions Division, who attended the event of the day, adding the company will actively expand its foundry business and prepare for future industries in 5G mobile communications, artificial intelligence, and autonomous driving areas.

[Photo by Samsung Electronics Co.]

The runner-up SK hynix has also pledged to invest 110 trillion won in chip factories in Icheon and Cheongju by 2030, and 120 trillion won in its Yongin semiconductor cluster to be completed in 2025, said Park Jung-ho, vice chairman of SK hynix.

To build the world’s biggest and most comprehensive chip supply chain, the Korean government will create five key bases – for memory chip production, materials, parts and equipment, cutting-edge devices, packaging platform and fabless manufacturing.

The major manufacturing base will be a cluster of memory and system semiconductor production (foundry) factories in Giheung, Hwaseong, and Pyeongtaek, Gyeonggi Province, where Samsung Electronics’ key sites are located, and Icheon, Gyeonggi, and Cheongju, Chungbuk, a key production site of SK hynix, and Eumseong, Chungbuk, where DB Hitek’s site is located.

In particular, the memory chip production sites in Pyeongtaek, Hwaseong, Icheon and Cheongju will be fostered as 'Mother Factory', where cutting-edge technology is applied first.

[Photo by SK hynix Inc.]

A production base dedicated to materials, parts and equipment will be built in Yongin, and one for cutting-edge equipment in Yongin, Hwaseong, and Cheonan. In Yongin, a semiconductor cluster led by SK hynix will be established, and some 50 suppliers and partners have already committed to joining the cluster.

The government plans to attract major global players in etching, deposition and extreme ultraviolet (EUV) equipment areas to allow local players to work with global partners in the base for cutting-edge equipment.

Regarding the packaging area, the government plans to create packaging platforms in Goesan, Chungbuk, and Onyang and Cheonan in Chungnam to develop and commercialize next-generation packaging technologies. In addition, Pangyo Techno Valley will be redesigned as a ‘fabless valley’ to support small and medium fabless startups.

On Friday, Samsung Electronics shares gained 1.4 percent to 79,600 won and SK hynix shares 1.7 percent to 119,500 won in the early morning session.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]