Samsung to invest $230 billion in the semiconductor business

Samsung will reportedly invest a whopping $230 billion in the semiconductor business over the next 20 years. The company will build the world’s largest semiconductor hub in its homeland South Korea. The investment is part of the local government’s latest push to boost the national tech industry.

According to a Reuters report, Samsung will erect five new chip factories in South Korea over the next two decades. This will open up new opportunities for hundreds of “materials, parts and equipment makers, fabless chipmakers, and semiconductor research-and-development organizations”. Many of them could shift their base or expand near the capital city of Seoul to take advantage of Samsung’s expansion.

Separately, Samsung will also invest more than KRW 60 trillion (roughly $45 billion) in the next ten years in regions outside the Seoul metropolitan area. This is a joint investment by Samsung Electronics, Samsung Display, and Samsung SDI to boost the chip packaging, displays, and battery technology. Note that the Koren conglomerate has multiple business units that operate independently of each other.

Samsung is pushing South Korea’s semiconductor industry forward

Samsung is one of the biggest players in the tech industry globally. The company leads the industry in several fonts. Most notably, it is the largest smartphone and TV brand and is also the biggest memory chip maker.

SK Hynix, which is second to Samsung in the memory chip business, is also a South Korean company. The local government is looking to take advantage of these two companies’ global presence in pushing the domestic tech industry forward, offering incentives and tax benefits to companies that invest big.

Earlier today, the South Korean government unveiled a KRW 550 trillion (~$417 billion) private-sector investment plan with a vision to boost local production of memory and non-memory chips, displays, and batteries. The government also allocated KRW 25 trillion for R&D in strategic technologies such as AI (artificial intelligence) over the next five years.

A separate KRW 360 billion (~$270 million) will go into chip packaging technologies. Lastly, South Korea has announced a budget of about KRW 100 billion (~$75 million) in electricity and water infrastructure for industrial complexes this year.

“The economic battlefield, which recently began with chips, has expanded … countries are providing large-scale subsidies and tax support,” said South Korean President Yoon Suk Yeol. “[We] must support private investments to ensure further growth … the government must provide the location, R&D, manpower, and tax support”.

This comes after a proposal to raise the tax deduction rate for “facility investments in chips and other strategic technologies” in January. South Korea is reportedly looking to raise the tax deduction rate from 8% to 15% for large corporations.