Samsung on Wednesday unveiled their plan to invest $230 billion over the next 20 years in a new semiconductor production mega cluster in South Korea. The country's government believes that the new chip manufacturing site and the expansion of existing fabs will make South Korea the world's largest producer of chips, de-throning Taiwan.

"The mega cluster will be the key base of our semiconductor ecosystem," a statement by the South Korean government published by Nikkei reads. [The mega cluster will enable South Korea to] leap forward as a leading country amid fierce global competition over advanced industries."

Samsung's new campus will be located near Yongin, Gyeonggi Province, and will house five advanced fabs. Some of the fabs will be used to produce logic chips for Samsung Foundry's customers, and others will focus on making various types of memory. Samsung plans to invest some $230 billion in its new site in exchange for tax breaks, subsidies, and other incentives from the government.

$230 billion is a huge pile of money, but it will be spent over a period of 20 years (i.e., $11.5 billion per year if spread equally) and on giant fabs that will use leading-edge fabrication technologies. These production facilities are set to adopt extreme ultraviolet (EUV) lithography scanners, which are extremely expensive. A current-generation ASML Twinscan NXE scanner with a 0.33 numerical aperture (NA) optics costs around $200 million, whereas a next-generation Twinscan EXE scanner with a 0.55 NA optics (High-NA) is expected to cost about $400 million. Every fab requires several cutting-edge scanners and thousands of other expensive tools to produce chips on leading-edge process technologies, so fabs are getting more costly and will be getting even more expensive in the coming years, so huge investment plans are set to become more common.

In addition to logic and memory chip production facilities, the new mega cluster will also house Samsung's semiconductor ecosystem partners, including suppliers of raw materials, parts, and even fabless chip designers, a total of 150 companies, reports Yonhap. Ecosystem partners tend to locate their facilities near large fab complexes to simplify logistics, but finding fabless chip developers in the fab campuses is something new. This might make a lot of sense since close collaboration between chip designers and chip producers at all stages may ensure higher performance and faster time-to-yield.

"The mega cluster will have the whole semiconductor value chain," the ministry said in a release. "The government will implement measures to become a global leader in the system semiconductor industry without a hitch in close cooperation with companies."

Interestingly, the South Korean government plans to nurture ten fabless firms with annual sales of over 1 trillion won ($761.4 million) by extending support for their prototype production, the Yonhap report reads, citing government officials. 

Samsung's $230 billion investment is a pivotal part of South Korea's plans to attract some $422 billion of private investments into such sectors as batteries, biotechnology, displays, electric vehicles, robots, and semiconductors over the next few decades.

"The economic war that began recently in semiconductors is broadening to advanced industries such as batteries and cars of the future," said Yoon Suk Yeol, president of South Korea, in a TV interview, reports Bloomberg. "Each country is sparing nothing in large-scale subsidies and tax benefits to build cutting-edge manufacturing facilities at home."

Indeed, China, Japan, the European Union, Taiwan, and the U.S. are all trying to advance emerging technologies and industries like AI, autonomous vehicles, high-performance computing, robotics, and renewable energy sources. Computer chips are crucial for all emerging technologies and industries, so Samsung's new mega cluster fab complex is vital for the company and the country.

Source: Bloomberg

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  • Threska - Wednesday, March 15, 2023 - link

    Hmmm, sounds very familiar.
  • TeXWiller - Thursday, March 16, 2023 - link

    To be fair, they did already commit to a $17B foundry in Texas before the CHIPS Act was enacted.
  • meacupla - Thursday, March 16, 2023 - link

    Well, yeah, South Korea is a hyper capitalist country. Why would you offshore to a more expensive country to operate in when you already have skilled and cheap labor at home?
    There are proper reasons for building fabs outside of your home nation.
    - Trying not to get import banned for performing too good, without a local factory. (Hello automotive industry)
    - Separating out eggs out from a single basket. (Disaster management, and Hello supply chain disruptions from COVID)
    - An offer you can't refuse (sweetheart deal)

    The CHIPS act very much a sweetheart deal for corporations, and there are minimal barriers in place. Like I am honestly surprised you think it doesn't go far enough.
  • tooltalk - Friday, March 17, 2023 - link

    I can think a few reasons why Samsung might want to invest in the US:
    #1, wages: South Korea's wage isn't necessarily cheap
    #2, geopolitical risk : North Korea and/or China
    #3, bad neighbor/supply-chain: Japan's export sanction on chemicals used in EUVs over a recent court decision against Japan's WW2 war crimes.

    Also, Samsung's $15B Austin fab has been around at least 2005 where Apple's A chips were once made.

    >> The CHIPS act very much a sweetheart deal for corporations, and there are minimal barriers in place. <<

    Biden's CHIPS Act has plenty of poison pills for foreign investors -- in addition to requiring all applications to open their book/trade-secret, and limiting their profit, it also dictates how Samsung's oversea chip making operation must operate to qualify for the subsidy, namely in China.
  • Oxford Guy - Friday, March 24, 2023 - link

    The US government (with presidents like Biden as figureheads) doesn't want to further subsidize China's chip-making odyssey?
  • Doug_S - Thursday, March 16, 2023 - link

    South Korea's government is giving away a lot of money, that's why Samsung is investing in South Korea. Has nothing to do with "onerous terms" in the US. If that was an issue they wouldn't be taking some of that money for fab buildout in Texas.

    South Korea's government doesn't want its fabs to the US so they will make sure Samsung and SK Hynix are getting enough support that the bulk of their manufacturing stays at home.
  • tooltalk - Sunday, March 19, 2023 - link

    Biden's IRA is a disaster -- too many nannies. Samsung's decision to build in TX came before the IRA was finalized.

    Samsung and South Korea is not Taiwan -- they don't believe in building everything in just their country. Samsung is fairly well diversified.
  • Oxford Guy - Friday, March 24, 2023 - link


    You don't seem to understand how politics actually works. US presidents are not dictators. They're sideshows designed to distract people.
  • mode_13h - Monday, March 27, 2023 - link

    > US presidents are not dictators. They're sideshows designed to distract people.

    They run the federal government, which is the bureaucracy established by Congress. They're also, the Commander In Chief of the US armed forces.

    What this means is that they can dictate certain things about what the federal government prioritizes and how they interpret laws governing their conduct. They also nominate or appoint the heads of government agencies (top posts require Congressional confirmation, but not lower-level ones).

    Beyond that, as head of the State department, they're at the top of international relations.

    Finally, they can veto bills passed by congress. Because of this, they have some negotiating power, when it comes to what bills will look like that won't pass with a veto-proof majority.

    Oh, and they can pardon people for federal crimes.

    The reason US Presidents have so much power is largely because we had the mixed blessings of George Washington being the first. Had it been someone less trustworthy and admired, perhaps there would've been more checks on their power.
  • Oxford Guy - Monday, March 27, 2023 - link

    'They're also, the Commander In Chief of the US armed forces.'

    Go back and watch Colin Powell vs. Bill Clinton on gays in the military and get back to me on that.

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