[Advanced Industry Development] Samsung Invests 300 Trillion Won in Semiconductor Cluster... Aiming to Catch TSMC (Comprehensive)

"Expected Employment Induction Effect of 1.6 Million"
Samsung Actively Invests in Government's Semiconductor and Advanced Industry Development

Samsung will invest 300 trillion KRW in the world's largest system semiconductor cluster to be established in Yongin, Gyeonggi Province. By expanding foundry (semiconductor contract manufacturing) production capacity at the Yongin cluster, Samsung will gain an advantage in competition with Taiwan's TSMC. This investment is expected to generate a total direct and indirect production inducement effect of 700 trillion KRW and create 1.6 million jobs across South Korea.

Creating the World's Largest System Semiconductor Cluster

On the 15th, the Ministry of Trade, Industry and Energy and the Ministry of Land, Infrastructure and Transport announced the 'National Advanced Industry Promotion Strategy,' which includes establishing an advanced system semiconductor cluster worth 300 trillion KRW by 2042. The semiconductor cluster, based on Samsung Electronics' large-scale new investment, will be the world's largest single complex. Five advanced semiconductor manufacturing fabs focused on system semiconductors will be built on a 7.1 million square meter (2.15 million pyeong) site. The government plans to attract up to 150 excellent domestic and foreign companies in the materials, parts, and equipment (SoBuJang) and fabless (semiconductor design) sectors.

The new cluster can be connected to existing semiconductor production complexes in Giheung, Hwaseong, Pyeongtaek, and Icheon, as well as nearby SoBuJang companies and the fabless valley in Pangyo. This means that beyond system semiconductors, the world's largest 'semiconductor mega cluster' can be completed.

The mega cluster will encompass the entire semiconductor value chain, including memory semiconductors, where Korean companies have strengths, as well as foundry, fabless, and SoBuJang sectors. Within the cluster, joint technology development and demonstration projects will be conducted among companies, research institutes, and universities, and semiconductor production developed by domestic fabless companies will also take place. The government expects this to become a leading model of a global semiconductor cluster attracting top domestic and international talent.

Large-scale core technology development for next-generation semiconductors will also be supported. Along with the cluster establishment, the government plans to actively open 4-nanometer processes for AI semiconductors and legacy processes for automotive and home appliance semiconductors to support prototype production and mass production by excellent fabless companies, aiming to nurture 10 fabless companies with sales of 1 trillion KRW by 2035. Additionally, 3.2 trillion KRW will be invested by 2030 in developing core technologies for next-generation promising semiconductors such as power semiconductors, automotive semiconductors, and AI. The government will also support purchase-conditional demand-linked projects between large corporations and fabless companies, with project sizes ranging from 5 to 8 billion KRW each.

Tax and workforce support plans were also announced. The government allocated 100 billion KRW this year for expanding tax credits on facility investments (through amendments to the Restriction of Special Taxation Act) and infrastructure support. Furthermore, efforts will be made to nurture 150,000 field workers, master's and doctoral-level talents, and regional talents by 2031. To complement the limitations of fine processes, competitiveness in the advanced packaging field, which has become increasingly important, will be enhanced through private investments worth 24 trillion KRW in production and research bases and government technology development support worth 360 billion KRW.

The plan to establish the world's largest system semiconductor cluster worth 300 trillion KRW comes amid strong protectionism and unprecedented investment support efforts by major countries such as the United States, Japan, and China to secure competitiveness in advanced industries. Semiconductors and other advanced industries are strategic assets that determine future growth engines and economic security. While South Korea possesses world-class semiconductor manufacturing capabilities and technology, it has been evaluated that government support levels and regulatory conditions are still insufficient.

700 Trillion KRW Production Inducement, 1.6 Million Jobs Created

The semiconductor industry is a pillar of South Korea's economy and a core asset for security, accounting for 5.6% of the country's gross domestic product (GDP), 24.2% of total facility investment, and 19.4% of total exports (the top single export item).

The semiconductor industry regards the creation of a large-scale semiconductor cluster in the metropolitan area as a "national industrial complex designation" domestically, but from a global perspective, it is seen as the South Korean government's bold move to attract a large semiconductor production base. It is expected that the 300 trillion KRW investment will generate a total direct and indirect production inducement effect of 700 trillion KRW and create 1.6 million jobs nationwide.

Moreover, if Samsung-led memory semiconductors widen their super-gap and foundry competitiveness improves, the 'mega cluster' will synergize with design houses, fabless companies, and SoBuJang companies, enabling a leap forward in the 'semiconductor ecosystem.' This will contribute to strengthening the competitiveness of various future industries such as automobiles, IT, AI, metaverse, and ChatGPT.

For Samsung, the establishment of the Yongin cluster, following the existing Giheung, Hwaseong, and Pyeongtaek sites, enables additional foundry factory construction, laying the foundation for world-class foundry capabilities. Currently, Samsung's foundry business is severely lacking in production capacity even considering the existing Pyeongtaek and Austin, USA sites, as well as the under-construction Taylor new plant. Once the foundry factory is built and operational at the Yongin cluster, Samsung will gain a competitive edge over Taiwan's TSMC. With the additional foundry production capacity secured through the Yongin cluster, analyses suggest that the real competition between Samsung Electronics and TSMC is just beginning.

Samsung to Invest 60 Trillion KRW in Provinces, Contributing to Balanced National Development

At the 14th Emergency Economic and Livelihood Meeting held that day, Samsung Electronics CEO Kyung Kye-hyun said, "We will integrate and operate the newly created new complex (Yongin cluster) with existing bases to build a cutting-edge semiconductor cluster," and added, "(Furthermore) we will make it a global forward base for innovation and development of South Korea's future advanced industries."

Samsung also announced investment plans for 'balanced national development' beyond the Yongin cluster. Samsung will invest a total of 60.1 trillion KRW over 10 years in Chungcheong, Gyeongsang, and Honam regions. Samsung affiliates including Samsung Electronics, Samsung Display, Samsung SDI, and Samsung Electro-Mechanics will designate region-specific specialized businesses such as semiconductor packaging, advanced displays, next-generation batteries, smartphones, electronic components, and materials, and execute investments accordingly.

In the Chungcheong region, a semiconductor packaging specialized complex, an advanced display cluster, and a next-generation battery mother factory (core production base) will be established. Samsung Electronics will expand facility investments to strengthen semiconductor packaging R&D capabilities and increase production at its Cheonan and Onyang sites. Next-generation semiconductor packaging technology is highly complex and requires close cooperation with partner companies in foundry, materials, and equipment sectors. This is intended to enhance the competitiveness of the entire domestic semiconductor ecosystem in the future. Samsung Display will build a 'display integrated cluster' in Asan to respond to diverse demands including small and medium IT devices, large devices such as TVs and digital signage, and new digital devices such as VR (virtual reality) and AR (augmented reality). Through this, the production ratio of advanced, high value-added products such as OLED and QD (Quantum Dot) will be expanded in the Asan region.

Samsung SDI plans to establish a mother factory for 'all-solid-state batteries,' which have larger capacity and are safer than existing lithium-ion batteries, in Cheonan to strengthen next-generation battery technology research and mass production systems. Samsung Electro-Mechanics will expand its production base in Sejong to enhance global competitiveness in the electronic circuit package substrate industry and maximize product added value.

In the Gyeongsang region, next-generation MLCC (Multi Layer Ceramic Capacitor) production bases, global smartphone mother factories, and high value-added ship production bases will be fostered. Samsung Electro-Mechanics will focus investment on research to internalize core materials for MLCC and develop Busan into an 'advanced MLCC specialized region.' Although Japanese companies currently occupy about 60% of the global MLCC market, this investment is expected to expand the influence of Korean companies. Samsung Electronics plans to establish its Gumi plant, which produces 16 million premium flagship smartphones annually including the Galaxy S23 and foldable phones, as a global smartphone mother factory. Samsung SDI will develop Gumi into a specialized production base for advanced materials for semiconductors and displays such as QD, with additional investments planned. Samsung Heavy Industries will expand orders focusing on high value-added products such as LNG carriers, contributing to the revitalization of the Geoje regional economy.

In the Honam region, Samsung Electronics plans to expand and reorganize the production of home appliances at its Gwangju plant to focus on premium smart products, fostering it as a 'global smart home appliance production base.'

An additional 3.6 trillion KRW will be invested over the next 10 years in win-win programs. These include semiconductor ecosystem development programs, technology and financial support, and regional talent cultivation support, which will be implemented in a multidimensional manner to contribute to regional industrial revival.