Earlier this week, the South Korean government announced a detailed plan involving 622 trillion won ($471 billion) in private sector investment between now and 2047.
South Korea will spend money to build 13 new chip factories and three research facilities, in addition to 21 existing ones. Stretching from Pyeongtaek to Yongin, the site is expected to be the world’s largest, capable of producing 7.7 million wafers a month by 2030.
The planned investment is a sharp increase from when Samsung and Hynix first announced their plans in 2023. The South Korean government has stepped up support for the domestic chip sector, which accounts for about 16% of total exports.
Seoul is vowing to protect a pillar of its economy as it grapples with growing global competition. As Japan and Taiwan invest heavily in their own chip sectors, South Korea has pledged to continue tax breaks for local chip companies.
As part of a two-decade plan, Samsung and Hynix are preparing to build their most sophisticated chip factories at home. Samsung is betting big on its foundry — which makes chips for other companies — as part of a 500 trillion won investment by 2047. Hynix aims to invest 122 trillion won in memory in Yongin over the same period.
The government said the zone would also house smaller chip design and materials companies. The overall ambition is to improve the country’s semiconductor self-sufficiency and increase its share of global logic chip production to 10% by 2030 from 3% now.
South Korea's industry ministry said it will ensure the new mega cluster has enough electricity and water to operate and benefit from new tax exemptions for some key chip technologies.
Pangyo, home to fabless companies (which design but do not manufacture chips), will be a hub for high-performance, low-power AI chips. Suwon, meanwhile, will be a central testing ground for compound semiconductors, while Pyeongtaek will have a new semiconductor R&D center on the new campus of the Korea Advanced Institute of Science and Technology, scheduled for completion in 2029.
"Domestic nuclear power plants will provide stable power for the new chip cluster," President Yoon Suk-yeol said at a meeting to announce the government's plan at Sungkyunkwan University's Natural Science Campus in Suwon. "We have seen foreign investment companies flocking in to explore potential business opportunities related to the emerging chip cluster. This trend represents a continuation of the record foreign investment inflow into our country last year."
The construction of new factories within the new mega-cluster will create jobs for 70,000 professionals as well as 40,000 new positions at parts and materials suppliers. The Ministry of Industry calculates that the project will create employment opportunities for 3.46 million people.
Minister of Trade, Industry and Energy Ahn Duk-geun expects semiconductor exports to reach $120 billion this year. “The success of the new mega cluster will continue to spread to other regions in the country and become the world’s leading chip center,” he said.
(According to Bloomberg, Korea Times)
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