Samsung Electronics to Invest $230 Bln Through 2042 in South Korea Chipmaking Base

A Samsung sign is displayed, during the GSMA's 2023 Mobile World Congress (MWC) in Barcelona, Spain March 1, 2023. (Reuters)
A Samsung sign is displayed, during the GSMA's 2023 Mobile World Congress (MWC) in Barcelona, Spain March 1, 2023. (Reuters)
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Samsung Electronics to Invest $230 Bln Through 2042 in South Korea Chipmaking Base

A Samsung sign is displayed, during the GSMA's 2023 Mobile World Congress (MWC) in Barcelona, Spain March 1, 2023. (Reuters)
A Samsung sign is displayed, during the GSMA's 2023 Mobile World Congress (MWC) in Barcelona, Spain March 1, 2023. (Reuters)

South Korean tech giant Samsung Electronics expects to invest $230 billion over the next 20 years to develop what the country's government called the world's largest chip-making base, in line with efforts to boost the national chip industry.

Samsung's around 300 trillion won project is part of a 550 trillion won private-sector investment plan unveiled by the government on Wednesday. Seoul's strategy aims to expand tax breaks and support to raise competitiveness of high-tech sectors including those involving chips, displays and batteries.

The plans come as other countries introduce steps to bolster domestic chip industries, including the United States which last month released details of its CHIPS Act, offering billions of dollars in subsidies for chipmakers that invest in the country.

"The economic battlefield, which recently began with chips, has expanded ... countries are providing large-scale subsidies and tax support," said President Yoon Suk Yeol on Wednesday.

"(We) must support private investments to ensure further growth ... the government must provide location, R&D, manpower, and tax support."

Samsung's manufacturing additions will include five chip factories and attract up to 150 materials, parts and equipment makers, fabless chipmakers and semiconductor research-and-development organizations near Seoul, the industry ministry said in a statement.

In addition to private-sector investment, the government will budget 25 trillion won or more over five years for R&D in strategic technologies such as artificial intelligence. It will provide about 360 billion won to develop chip packaging, and about 100 billion won in electricity and water infrastructure this year for industrial complexes.

In January, the government proposed raising the tax deduction rate for facility investments in chips and other strategic technologies from 8% to 15% for large corporations.

Separately, Samsung Electronics, unit Samsung Display, affiliates Samsung SDI and Samsung Electro-Mechanics said they plan to invest 60.1 trillion won in the next 10 years in regions outside the Seoul metropolitan area to develop chip packaging, displays and battery technology.

South Korea, home to the world's two biggest memory chip makers, Samsung Electronics and SK Hynix Inc, is seeking to improve supply-chain stability to become a major player in the non-memory chip field, currently dominated by chipmakers such as Taiwan Semiconductor Manufacturing Co Ltd and Intel Corp.



Analysts Warn US Could Be Handing Chip Market to China

A smartphone with a displayed AMD logo is placed on a computer motherboard in this illustration taken March 6, 2023. (Reuters)
A smartphone with a displayed AMD logo is placed on a computer motherboard in this illustration taken March 6, 2023. (Reuters)
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Analysts Warn US Could Be Handing Chip Market to China

A smartphone with a displayed AMD logo is placed on a computer motherboard in this illustration taken March 6, 2023. (Reuters)
A smartphone with a displayed AMD logo is placed on a computer motherboard in this illustration taken March 6, 2023. (Reuters)

As the Trump administration attempts to choke off exports of strategically important computer chips to China, experts say the effort might well backfire, fueling innovation at Chinese firms that could help them seize the world semiconductor market.

"What's actually happening is that the US government right now is handing China a big win as it tries to get their own chip business going," said Jack Gold, principal analyst at J.Gold associates.

"Once they're competitive," he told AFP, "they'll start selling around the world and people will buy their chips."

When that happens, he added, it will be difficult for US chip makers to reclaim lost market share.

Silicon Valley semiconductor star Nvidia and its US rival Advanced Micro Devices (AMD) expect big financial hits from new US licensing requirements for semiconductors exported to China, they notified regulators this week.

Nvidia expects the new rules to cost it $5.5 billion, while AMD forecast it could sap as much as $800 million from the company's bottom line, according to filings with the US Securities and Exchange Commission (SEC).

Administration officials told Nvidia it must obtain licenses to export its H20 chips to China because of concerns they may be used in supercomputers there, the company said.

The United States had already restricted exports to China, the world's biggest buyer of chips, of Nvidia's most sophisticated graphics processing units (GPUs), designed to power top-end artificial intelligence models.

Nvidia essentially developed the H20 chip for the Chinese market, aiming to maximize performance while meeting previous US export rules, but the new licensing requirements pose a roadblock, according to Gold.

For AMD, the new US export control measure applies to its MI308 GPUs, which are designed for high-performance applications like gaming and artificial intelligence, it said in a filing.

It noted that there are no guarantee licenses for sales to China will be granted.

- Opportunity for China? -

Independent tech analyst Rob Enderle predicted Chinese chip makers -- likely led by the huge Huawei corporation -- will ramp up efforts to snatch the lead in the market.

"It's going to be a godsend for China as they spin up their own microprocessor business," Enderle said of the tightened US export rules.

"This will be a really quick way to hand over US leadership in microprocessors and GPUs."

The Chinese government has ample resources and motivation to bolster its chip industry, according to Gold.

He said while US President Donald Trump might think he can "bully people" to achieve his objectives, "the worldwide economy is not like that."

Instead, Trump's tariffs have alienated allies, increasing their incentive to turn to China for chips, the analyst said.

"Across the board, this is going to create real problems for US companies competitively," Enderle said.

"Companies located overseas are suddenly going to be in much better shape to compete."

Nvidia chief executive Jensen Huang has said publicly that the AI chip powerhouse can comply with the new US requirements without sacrificing technological progress, adding that nothing will stop the global advancement of artificial intelligence.

"Nvidia is one of the most important pieces in this (US) chess game with China," Wedbush analyst Dan Ives said in a note to investors.

"The Trump administration knows there is one chip and company fueling the AI Revolution and it's Nvidia," he said, and so it placed "a 'Do Not Enter' sign in front of China" to slow its progress.

Ives warned, however, that the chip wars are not over. He expects "more punches to be thrown by both sides."