Samsung will invest $230 billion in chip production

With government support, Samsung could catch up to TSMC in contract chip manufacturing (photo: Samsung)

The South Korean corporation Samsung Electronics plans investment from 300 trillion won (about US$230 billion dollars) in building new chip manufacturing facilities over the next 20 years. The project will be implemented as part of the state program for the development of the semiconductor industry in the country.

Specifically, Samsung will build a new cluster of five enterprises by 2042, which will be located in the suburbs of Seoul. The company expects these plants to attract more than 150 domestic and foreign chip makers. These may include chip developers who do not have their own manufacturing facilities.

Samsung remains the world’s largest maker of memory chips, but the cyclicality of this market often undermines the profitability of the business, and in the future the company would like to earn more in the semiconductor contract manufacturing segment. Some of Samsung’s five new businesses will focus on serving third-party customers, but the exact number has not been determined.

“We need to support private investment in this area (semiconductor technology),” South Korean President Yoon Suk-yeol said. He added that the government “must provide places for business, technology, skilled labor and tax incentives”.

Samsung’s project is part of the government’s plan to take the lead in areas such as chips, displays, batteries and electric vehicles. The authorities intend to invest about 422 billion dollars in the technological sector of the country, notes Bloomberg.

Government support could help Samsung catch up to TSMC, the world’s largest contract chip maker. The Taiwanese giant produces some of the world’s most advanced chips for Apple and other leading electronics manufacturers.

In addition, the South Korean government will allocate more than $9 billion over five years for research and development in strategic technologies, including artificial intelligence. In 2023, authorities will provide more than $275 million for chip packaging technology development and about $76 million for power and water infrastructure for industrial complexes.

In January 2023, the South Korean government proposed to raise the tax deduction rate for investments in chips and other strategic technologies from 8% to 15% for large corporations.

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