Samsung to Invest $300 Billion in Construction of South Korean Chip Center

The country aims to build the world's largest semiconductor chip center by 2042

A view shows Samsung Electronics' chip production plant at Pyeongtaek, South Korea, in this handout picture obtained by Reuters on Sept. 7, 2022. Samsung Electronics/Handout via Reuters

Samsung Electronics will invest 300 trillion won ($227 billion) over the next 20 years to build five new chip plants in South Korea as part of the government’s goal to establish “the world’s largest” chip center by 2042.

The plans were unveiled by the South Korean Ministry of Trade, Industry, and Energy on March 15. The ministry said the chip center will be established in Gyeonggi Province and attract 150 materials, components, and fabless companies. (Fabless companies include design and sales while outsourcing manufacturing.)

Samsung said the new plants will be located near its existing domestic factories and produce both computer memory chips for storing data and higher-margin logic chips designed to perform a broader range of functions.

Samsung Vice Chairman Han Jong-hee told reporters that the company would “push ahead with a variety of projects this year, including wearable robotic devices,” Yonhap News Agency reported.

The semiconductor cluster is part of broader government plans to promote six key technology industries the country sees as most crucial for its export-dependent economy.

Apart from semiconductors, they include rechargeable batteries, electric vehicles, robotics, displays, and biotechnology. The government hopes to draw 550 trillion won ($416 billion) in corporate investment on those projects through 2026.

South Korean President Yoon Suk-yeol said the government will need to support private sector investment for further growth in high-tech industries, such as semiconductors, batteries, and displays.

“Cutting-edge industries are a core growth engine, as well as a security and strategic asset, and directly connected to our jobs and the public’s livelihoods,” Yoon said at a public livelihood meeting on March 15, according to Yonhap News Agency.

The government will also allocate 25 trillion won ($18.9 million) over five years for research and development in strategic technologies, such as artificial intelligence, according to the ministry’s statement.

South Korea’s plan comes as other technology powerhouses—including the United States, Japan, and China—are building up their domestic chip manufacturing and deploying protectionist measures, tax cuts, and sizeable subsidies to lure investments.

US–South Korea Semiconductor Alliance

In May 2022, President Joe Biden toured Samsung’s chip complex in Pyeongtaek, which houses some of the world’s largest chip production lines, accounting for about 15 percent of global memory chip production.

During the tour, Biden and Yoon pledged to strengthen “semiconductor alliances” among the world’s largest chip-making countries to ease global shortages.

Samsung Electronics has, thus far, made the largest U.S. investment pledge of about $360 billion over the next several years until 2026 to boost its businesses in semiconductors and various emerging industries such as artificial intelligence, biotech, and next-generation communications.

Samsung’s investment plan comes as chip shortages continue to plague the electronics industry, and major chipmakers such as Samsung Electronics Co., Intel Corp., and Taiwan Semiconductor Manufacturing Co. (TSMC) are planning further price hikes.

Three companies under the Hyundai Motor Group—Hyundai Motor Company, Kia, and Hyundai Mobis—collectively pledged about $50 billion in U.S. investments by 2025.

Lisa Bian and The Associated Press contributed to this report.