Samsung to expand Cheonan chip packaging facility for HBM ramp-up

Samsung Electronics will expand its semiconductor packaging facility in Cheonan, South Chungcheong, by 2027 to boost high bandwidth memory chip production, inking an agreement with the local government on Tuesday.

From left: Samsung Electronics President Nam Seok-woo, South Chungcheong Gov. Kim Tae-heum and Cheonan City Mayor Park Sang-don pose after signing a memorandum of understanding on Tuesday. [SOUTH CHUNGCHEONG PROVINCIAL GOVERNMENT]

Samsung Electronics will expand its semiconductor packaging facility in Cheonan, South Chungcheong, by 2027 to ramp up the production of high bandwidth memory (HBM) chips.

The size of the investment was not disclosed, but it will be more cost-effective than a typical expansion of a chip packaging site given that the chipmaker will rent a building owned by its subsidiary, Samsung Display.

Under a memorandum of understanding signed with the provincial government on Tuesday, the new facility is scheduled to be completed by December 2027.

The site is where Samsung’s existing HBM packaging facility is located, while most of its chip manufacturing plants are in Pyeongtaek or Hwaseong in Gyeonggi.

Packaging is considered crucial to optimizing the efficiency of high-end chips like HBM.

The manner in which a chip is packaged impacts the flow of electricity into chips and facilitates its connection to the rest of the system, as well as contributing to cooling and damage protection.

Despite its best efforts, Samsung's HBM3E chips have yet to gain approval from Nvidia. Rival SK hynix is the AI chip behemoth's main supplier of the high-end memory.

South Chungcheong Gov. Kim Tae-heum pledged to facilitate the administrative approval and financial support needed for the building of the new packaging lines.

“[The province] will come up with more policies conducive to fostering the growth of Samsung and local economy,” the governor said in a statement released by the provincial government.

Other government officials such as Cheonan City Mayor Park Sang-don as well as Samsung Electronics President Nam Seok-woo also attended the ceremony celebrating the signing.

Update, Nov. 11: Changed date memorandum of understanding was signed to Tuesday.

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