South Korea to create $472bn ‘semiconductor mega cluster’
The South Korean government is working with Samsung Electronics and SK Hynix on a huge investment plan to keep the country at the forefront of the global semiconductor market.
President Yoon Suk Yeol personally outlined the scheme, which will span a 21 million square metre industrial zone within the southern Gyeonggi Province. The plan includes the expansion of the existing 21 fabrication facilities in the area, along with the creation of fabless plants in Pangyo and the construction of foundry and memory chip production facilities in Hwaseong, Yongin, Icheon, and Pyeongtaek.
There will also be zones dedicated to the manufacture of materials, parts, and equipment across Anseong, and R&D centres based in Giheung and Suwon.
It is a vast and ambitious plan which will run to 2047 and consume a massive 622 trillion won (approximately USD 472 billion) of government support. Samsung Electronics will invest 500 trillion in nine new fabs while SK Hynix will allocate 122 trillion won to build four new fabs.
But the country's rulers clearly believe the investment is a strategic necessity. The US, Japan, India and Europe are all doubling down on their own domestic supply chains in an attempt to move away from dependence on Taiwan and China. South Korea might have powerful domestic companies, but this is no guarantee of future dominance.
In addition to the investment plan, the government has also extended the tax break on semiconductor investments, which was originally set to expire this year. It estimates the new project will generate 3.46 million jobs and could secure 10% of the global non-memory chip market by 2030 (up from 3%).
"By completing the construction of the semiconductor mega cluster at an earlier period, we will obtain the world's leading competitiveness in the chip sector and offer quality jobs for younger generations," said Industry Minister Ahn Duk-geun.