Samsung’s staggering chip investment plans

An aerial view of the Samsung Electronics’ chip production facilities at Hwaseong, South Korea

Samsung Electronics expects to invest a staggering US$230-billion (R4.2-trillion) over the next 20 years to develop what the country’s government called the world’s largest chip-making base, in line with efforts to boost the national chip industry.

Samsung’s ₩300-trillion project is part of a ₩550-trillion private sector investment plan unveiled by the government on Wednesday. Seoul’s strategy aims to expand tax breaks and support to raise competitiveness of hi-tech sectors including those involving chips, displays and batteries.

The plans come as other countries introduce steps to bolster domestic chip industries, including the US which last month released details of its Chips Act, offering billions of dollars in subsidies for chip makers that invest in the country.

“The economic battlefield, which recently began with chips, has expanded … countries are providing large-scale subsidies and tax support,” said President Yoon Suk Yeol on Wednesday.

“We must support private investments to ensure further growth … the government must provide location, R&D, manpower and tax support.”

Samsung’s manufacturing additions will include five chip factories and attract up to 150 materials, parts and equipment makers, fabless chip makers and semiconductor research-and-development organisations near Seoul, the industry ministry said in a statement.

In addition to private sector investment, the government will budget ₩25-trillion or more over five years for R&D in strategic technologies such as artificial intelligence. It will provide about ₩360-billion to develop chip packaging, and about ₩100-billion in electricity and water infrastructure this year for industrial complexes.

Tax deduction

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

South Korea, home to the world’s two biggest memory chip makers, Samsung Electronics and SK Hynix, is seeking to improve supply-chain stability to become a major player in the non-memory chip field, currently dominated by chip makers such as Taiwan Semiconductor Manufacturing Co and Intel.  — Heekyong Yang and Joyce Lee, (c) 2023 Reuters

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