Samsung will invest $230 billion to build “mega” chip clusters

Samsung will invest $230 billion to build “mega” chip clusters

SEOUL, South Korea (AP) – Samsung Electronics said Wednesday it expects to invest 300 trillion won ($230 billion) over the next 20 years as part of an ambitious South Korean national project to build the world’s largest semiconductor manufacturing base near the capital Seoul. .

The chip-making “mega cluster,” to be established in Gyeonggi province by 2042, will be anchored by five new semiconductor plants built by Samsung. According to South Korea’s Ministry of Trade, Industry and Energy, it will attract another 150 companies that produce materials and components or design high-tech chips.

Samsung’s new plants will be located near its existing domestic factories and will make both computer memory chips used to store data and high-margin logic chips designed to perform a wide range of functions, the company said.

A giant in the global memory business, Samsung is trying to expand its presence in advanced chips, hoping that the adoption of new technologies such as 5G wireless networks, artificial intelligence and self-driving cars will boost demand in the coming years.

The semiconductor cluster is part of broader government plans announced Wednesday to promote six key technology industries that the country sees as most important to its export-dependent economy. In addition to semiconductors, these include rechargeable batteries, electric vehicles, robotics, displays and biotechnology. The government hopes to draw 550 trillion won ($422 million) in corporate investment in these projects by 2026.

South Korea’s plan comes as other tech powerhouses, including the United States, Japan and China, are ramping up their domestic chip production, putting in place protectionist measures, tax cuts and huge subsidies to lure investment. In a meeting with economic policymakers and business leaders on Wednesday, South Korean President Yoon Suk-yeol described the technology industry as the country’s “main economic growth engine and security and strategic asset that is directly linked to job creation and livelihoods.”

“(South Korea) has world-class manufacturing capacity and technology in various high-tech industries such as semiconductors, secondary batteries and displays, but (government) support and regulatory conditions were insufficient,” the trade ministry said in a statement.

Samsung, South Korea’s largest company, has seen its profits fall in recent months as a weak global economy, Russia’s war on Ukraine and high inflation, dampened demand for its consumer electronics products and memory chips. The company’s profits fell nearly 70% for the three months through December, partly because chip prices fell sharply as clients adjusted their inventories to reflect economic uncertainty.

SK Hynix, another major South Korean chipmaker, reported an operating loss of 1.7 trillion won ($1.3 billion) for the October-December period, marking its first quarterly deficit since 2012.

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