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Samsung to build 'world's largest' chip cluster in S. Korea

March 15, 2023

Samsung Electronics expects to invest hundreds of billions to build the world largest chip hub as part a of South Korean national project seeking to gain a further edge in the global semiconductor industry.

PC circuit board made up of semiconductors.
South Korea plans to build the biggest chip center.Image: Imaginechina-Tuchong/imago images

Seoul has announced it would build the biggest chip center in the world, largely using some 300 trillion won (roughly $230 billion or €220 billion) of private investment from electronics giant Samsung over the next 20 years.

The chip manufacturing "mega cluster" of facilities will be built in various locations in Gyeonggi province by 2042.

The center will be anchored by five new semiconductor plants built bySamsung.

What is the plan?

The South Korean government seeks to invest heavily in six technology areas including chips, displays, rechargeable batteries, electric vehicles, robotics and bio-technology.

Although the country is well established in these sectors, the government hopes to tap into the growing demand due to adoption of new technologies like 5G wireless networks, artificial intelligence, and self-driving cars.

According to President Yoon Suk-yeol, South Korea will "build the world's largest scale system semiconductors cluster in the capital areas using massive private investments worth 300 trillion won."

Speaking at an economic policy meeting, Yoon said: "Speed is important. The government will do its best to realize the cluster project."

The semiconductor center will aim to attract 150 other companies which will be producing materials and components or designing high-tech chips, according to South Korea's Ministry of Trade, Industry and Energy.

Samsung's new plants will be located near its existing domestic factories. They will manufacture both computer memory chips used for data storage and higher-margin logic chips made to perform a broader range of functions, Samsung said.

With technology powerhouses including the United States, the EU, Japan and China building up their domestic chip manufacturing to deploy protectionist measures, tax cuts and subsides to lure investors, South Korea has now put forward its own bid to enhance its already-strong market share.

Quantum computers and the future of US-made microchips

President Yoon described the technology industry as among South Korea's "key economic growth engines and security and strategic assets that are also directly linked to job creation and livelihoods."

Most of the world's advanced microchips are made by Samsung and Taiwan's TSMC.

Samsung reported a major dip in operating profit of almost 70% in January for the last quarter of 2022 compared to the same time period in 2021. The company cited reduced demand and "deepening uncertainties" in the global economy amid Russia's invasion of Ukraine. 

dmn/msh (AFP, AP)