Samsung Electronics to invest $230 billion into chip complex

Samsung Electronics will invest 300 trillion won ($230 billion) into a massive chip cluster in Yongin, Gyeonggi by 2042 as Korea seeks to strengthen the supply chain amid the global competition to attract chipmakers.

A proposed site for Samsung Electronics $230 billion chip complex in Yongin, Gyeonggi [YONHAP]

Samsung Electronics will invest 300 trillion won ($230 billion) into a massive chip cluster in Yongin, Gyeonggi by 2042, the company and government said Wednesday, as Korea seeks to strengthen the supply chain amid the global competition to attract chipmakers.

“Korea Silicon Hills,” a 7.1-million-square-meter (76.4-million-square-foot) site, will host five chip fabrication plants and 150 suppliers of parts and materials for manufacturing a wide range of processors powering computers, cars and appliances.

If the project goes as planned, the Yongin complex will be the world's largest semiconductor manufacturing site in terms of production capacity, according to the chipmaker, the Industry Ministry and the Land Ministry.

The initiative is part of a 550 trillion-won proposal to further what the government calls "advanced industries," a list that includes semiconductors, displays, electric vehicle batteries, biopharmaceuticals, connected cars and robots.

President Yoon Suk Yeol, high-ranking government officials and representatives from Samsung Electronics, SK and Hyundai Motor attend a briefing on the establishment of multiple industrial complexes. [YONHAP]

The government announced 14 other new industrial complexes focused on six targeted industries in 14 cities, including Daejeon, Cheonan, Gwangju and Daegu.

Samsung Electronics didn’t provide a specific timeline, but the Land Minister said the project could start as early as 2026.

“The government will pull out all the stops to let the projects break ground by 2026 while President Yoon Suk Yeol is still in office,” said Minister of Land, Infrastructure and Transport Won Hee-ryong during a Wednesday presentation, adding that the government will facilitate the process by lifting regulations and establishing a team dedicated to the cluster project.

The location will be in the vicinity of existing chip plants run by Samsung Electronics and SK hynix and facilities of smaller parts companies and chip designers in Gyeonggi. Samsung runs semiconductor complexes in Pyeongtaek, Hwaseong and Giheung, all located in Gyeonggi province.

Chips being produced will be system-on-chips (SoC), including main processors for cars, mobile devices and some PCs, and custom SoCs based on designs from customers.

“The chip cluster will bring together manufacturing plants, production support centers and supplier plants to make a large-scale industry complex centered around foundry,” said Industry Minister Lee Chang-yang, using an industry term that refers to custom-making of chips based on designs from clients.

“The new complex will be able to compete with Texas and Taiwan’s Hsinchu Science Park by connecting with existing semiconductor manufacturing complexes in Giheung, Hwaseong, Pyeongtaek, Icheon and Yongin,” Lee said.

Of the SoC chips, the cluster will be focused on producing processors designed for artificial intelligence training and chips used in cars and appliances that are manufactured with relatively old manufacturing processes.

Production of chips for cars and appliances was hit hard by the global chip shortage that began in 2020.

The chip drought and an intensified rivalry between the United States and China pushed many countries to boost efforts to ramp up production capacity in key industries, including chips, EV battery and bio.

Samsung Electronics and SK hynix claim dominant market share in the memory chip market, but their presence in the SoC market is far weaker compared to major players, like Intel, Qualcomm, AMD and Nvidia.

Samsung Electronics has set aside another 60.1 trillion won to expand production of smartphones, displays and semiconductor packaging outside of the Gyeonggi area.

To enhance the performance of high-performing chips, it will scale up its chip packaging plants in Cheonan and Onyang in Chungcheong.

The tech company also plans to crank up production of organic light-emitting diode displays for metaverse headsets and televisions at its plant in Asan, South Chungcheong.

It will turn its smartphone factory plant in Gumi into a “mother factory” to expand the range of smartphones produced there. Presently, the Gumi plant is mainly responsible for high-end lines, like Galaxy S devices and foldable models, while factories in Vietnam and India are manufacturing budget phones, like Galaxy A devices.

As for the other industrial parks pushed by the government, Gwangju and Cheonan will be sites for automotive initiatives, while Changwon and Gyeongju will focus on nuclear power technology, including small modular reactors.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]