Plans Announced to Build World’s Largest Chip Cluster in South Korea for $471 Billion

With its eye on maintaining its position as the world’s largest semiconductor manufacturer, Samsung Electronics, in collaboration with the South Korean government, plans to develop a major chip-producing cluster. This massive endeavour aims to consistently meet the ever-growing market demand and further stimulate investments in the industry.

Multibillion-Dollar Investments

South Korea’s top investors, namely Samsung Electronics and SK hynix, intend to inject a whopping $471 billion into the local semiconductor industry by 2047. This investment will fuel the construction of 13 new specialised semiconductor facilities. This is in addition to the existing 21, and three research centres are also in the pipeline. By 2030, the envisioned industrial cluster, spanning Pheonheka to Yongin, is expected to process up to 7.7 million silicon wafers monthly.

Economic Significance and Government Support

Semiconductor components form 16% of South Korea’s exports, making it all the more crucial for the government to propel the sector’s development. While direct subsidiaries from the government might be sparse, significant tax relief is up for grabs. Samsung Electronics alone plans to invest $378 billion in improving its South Korean facilities by 2047. Its goal is to increase the revenue generated from producing chips for third-party companies. Competitor SK hynix will be injecting $92 billion into its memory chip production unit in Yongin over the same period.

Role of Smaller Firms in the Cluster

South Korean officials believe that smaller companies, involved in chip design and providing production materials, will also find their places within this cluster. This strategic plan not only aims to enhance South Korea’s industrial self-sufficiency and broader economic landscape but to elevate the country’s stake in global semiconductor production from the current 3% to 10% by the decade’s end.

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