Samsung Electronics plans $222 million chip test facility in Japan: report

[Photo by MK DB]

South Korea’s tech giant Samsung Electronics Co. will build a new chip development facility in an apparent bid to reorganize its global supply chain.

Japan’s Nihon Keizai Shimbun (Nikkei) reported on Sunday that Samsung Electronics will invest about 300 million yen ($222 million) in Yokohama, southwest of Tokyo, to build a new development facility for a production line for a prototype of a next-generation chip device, with the goal of starting operations in 2025. Industry insiders predict that the new line will likely produce prototypes related to post-processing for semiconductors and image sensors for vehicles.

With this new chip development facility in Yokohama, the tech giant seems to be taking steps to fully operate its recently launched Device Solutions-related research and development center in Yokohama, dubbed DSRJ. In particular, this investment by the company seems to be designed not only to capitalize on Japan’s materials and parts competitiveness but also to contain the expansion of its rival, Taiwan Semiconductor Manufacturing Co. (TSMC), in Japan. Samsung Electronics’ DS Division is in charge of semiconductor and display businesses.

TSMC, the world’s largest foundry or contract chipmaking company, is building a chip factory in Kumamoto Prefecture, Japan, with the goal of starting operations at the end of 2024, and recently announced plans to build a second Kumamoto plant. The products produced here are expected to be supplied to Japan. TSMC is also building an R&D center in Ibaraki Prefecture.

The Japanese newspaper also focused its report on the fact that TSMC, the world’s No. 1 player in terms of semiconductor sales, and Samsung Electronics, the No. 2 player, will both set up R&D bases in Japan.

Japan’s future market potential also seems to be an important factor for Samsung Electronics’ decision as there are many companies in Japan that need chips for autonomous vehicles, which the tech giant is focusing on as a future growth engine.

Taiwan Semiconductor Manufacturing Co. logo [Courtesy of TSMC]

Sony Group Corp. and Honda Motor Co. established a joint venture automotive company, Sony Honda Mobility Inc., to develop autonomous cars. The fact that Kyung Kye hyun, head of Samsung Electronics Device Solutions Division, visited Sony headquarters in Tokyo in November and Sony Chairman Kenichiro Yoshida reciprocated by visiting Samsung Electronics’ Pyeongtaek Campus in March can be seen as part of efforts for the two companies to cooperate to secure dominant positions for the future market.

During their recent two rounds of summit talks, the Korean and Japanese leaders agreed to establish supply chains for chips through cooperation between Japanese materials, parts and equipment companies and Korean manufacturers of chip equipment. In this regard, analysts watch carefully whether the Japanese government will offer subsidies to Samsung Electronics. The Nikkei report predicted that the Korean company could receive about 10 billion yen from the Japanese government for this R&D investment.

The Japanese government earlier provided TSMC with about 476 billion yen, which is half of the company’s facility investment for the Kumamoto plant, and 19 billion yen, about half of its project cost to build its semiconductor R&D center in Ibaraki Prefecture.

The Japanese government also plans to provide about 330 billion yen to Rapidus Corp., a semiconductor manufacturer established last year with the support of eight major Japanese companies, including Toyota Motor Corp., Kioxia, Sony, Nippon Telegraph & Telephone Corp. (NTT), and SoftBank Group Corp.

In addition, the Japanese government will offer financial support to Kioxia building a NAND flash memory plant in Iwate Prefecture with Western Digital Corp., a U.S. computer drive manufacturer and data storage company, and U.S. semiconductor producer Micron Technology Inc.’s plan to expand a DRAM plant in Hiroshima.

Samsung Electronics Executive Chairman Jay Y. Lee recently met with Tesla Inc. Chief Executive Officer Elon Musk in the U.S. to discuss ways to cooperate in future high-tech industries, including semiconductors for autonomous vehicles, according to the company. The meeting was held during Musk’s visit to Samsung Electronics’ semiconductor research center in Silicon Valley on May 10, along with his executives, Samsung said.

These series of developments can be seen as reflecting Lee’s future strategy to secure a dominant position for the next-generation semiconductor market.