[Chip Talk] Transmission Line and Water Supply Issues Must Be Resolved Within 3 Years to Cement 'World Semiconductor Hub = Yongin'

Samsung's 300 Trillion Won Foundry Gamble
Semiconductor Industry: "The Sooner the Better"
Establishing a Foothold for Global Hegemony Battle Victory

The world's largest 'semiconductor mega cluster' is being established in South Korea. Samsung Electronics plans to invest 300 trillion won to create an 'Advanced System Semiconductor Cluster' in Namsa-eup, Yongin, and together with the semiconductor cluster in Wonsam-myeon led by SK Hynix, Yongin City is expected to transform into the 'world's largest semiconductor hub.' As the United States, Japan, Taiwan, and others aggressively expand public-private cooperation to secure semiconductor supply chains, South Korea, equipped with a 'Silicon Shield,' is expected to enhance its competitiveness amid the global semiconductor hegemony battle.

◆Samsung invests 300 trillion won... Companies gathering in Yongin= The system semiconductor specialized complex that Samsung Electronics is establishing in Yongin, Gyeonggi Province, spans 7.1 million square meters (2.15 million pyeong), approximately 2.5 times the size of Samsung Electronics' Pyeongtaek Campus. Samsung plans to build five advanced semiconductor manufacturing plants in this area by 2042 and attract up to 150 companies, including semiconductor production complexes, nearby materials, parts, and equipment (MPE) companies, and fabless (semiconductor design) firms.

Yongin has already attracted attention as the area where SK Hynix is developing a semiconductor cluster. SK Hynix is investing 12.18 trillion won to build an advanced memory semiconductor cluster on 4.15 million square meters (1.26 million pyeong) in Wonsam-myeon, Yongin. This site will house SK Hynix's fab 4 and numerous MPE partner companies. The expected operational date is 2027.

Samsung aims to expand its foundry (semiconductor contract manufacturing) competitiveness through this cluster development. Although Samsung is constructing a new factory in Taylor, USA, in addition to its existing plants in Pyeongtaek and Austin, USA, there have been evaluations that production capacity is insufficient. According to Taiwanese market research firm TrendForce, as of Q4 last year, Taiwan's TSMC, the industry leader in the foundry market, held a 58.5% market share, maintaining a gap with Samsung Electronics at 15.8%.

Kyung Kye-hyun, President of Samsung Electronics' DS (Device Solutions) Division, stated, "We will integrate the new complex with existing bases to build a cutting-edge semiconductor cluster." Samsung plans to develop Hwaseong and Giheung as memory, foundry, and R&D hubs, and Pyeongtaek and Namsa-eup as core bases for advanced memory and foundry, pursuing synergy.

The government is developing Yongin, Gyeonggi Province, into a national high-tech industrial complex to create the world's largest semiconductor cluster, and is designating 14 new national industrial complexes in local areas to foster advanced industries such as semiconductors, future vehicles, and space. The photo shows the area around Namsa-eup, Cheoin-gu, Yongin-si, Gyeonggi Province, designated as a semiconductor national industrial complex. Photo by Jinhyung Kang aymsdream@

◆Fast like the US, Japan, and Taiwan... 'Speed is life'= In the past, even when companies decided to invest, delays in government permits and criticisms of regional imbalance often hindered actual execution. Examples include Samsung's Pyeongtaek Campus, which lost five years due to power transmission line issues, and SK Hynix's Yongin semiconductor cluster, delayed by one and a half years due to industrial water supply problems.

In contrast, Japan allowed Taiwan's TSMC to start construction of the Kumamoto plant just six months after announcing the construction plan in October 2021, beginning in April 2022. Samsung Electronics' Austin plant in Texas, USA, was selected and started construction in 1996 by the US government and began operations in 1997. Samsung's Xi'an plant in China also began operations in 2014 after site selection and construction announcements in 2012.

However, this time, the government and local authorities are expected to work as one team to produce speedy results. In fact, plans are underway to designate the entire site of the advanced system semiconductor cluster as a 'special quota' exempt from the metropolitan area factory total volume system. President Yoon Suk-yeol said, "The government will make every effort to ensure the rapid promotion of the national advanced complex." Minister of Land, Infrastructure and Transport Won Hee-ryong also stated, "We will remove all factors that slow down speed" and "We will operate a pan-government support team to enable groundbreaking by the end of 2026." Recently, the government and ruling party have also considered supporting the national advanced industrial complex development plan to shorten the industrial complex development period, which usually takes over seven years, to two years and six months, raising expectations further. Samsung Electronics is expected to shorten the development period compared to SK Hynix's production facilities.

Semiconductor companies have welcomed the government's measures. An industry official said, "The faster the complex is developed, the better," explaining, "Quick installation of semiconductor infrastructure such as electricity and water, and resolving regulations like land acquisition procedures and zoning changes mean fewer hurdles." The official emphasized that the biggest advantage is reducing opportunity costs rather than direct costs. "There is no longer a need to consider other regions in case of failure," the official added, "and companies no longer have to take the initiative to solve these issues."

◆Korean semiconductor industry unites... Expected to play the role of 'Silicon Shield'= The semiconductor industry highly values collaboration within the supply chain and related industries. The competition in the semiconductor industry is not just between companies but has shifted to ecosystem and inter-country alliance competition for this reason. Taiwan is recognized for having a solid semiconductor ecosystem centered on TSMC. For example, Taiwan's Hsinchu Science Park houses hundreds of Taiwanese IT companies, including foundry manufacturing facilities represented by TSMC and UMC, and semiconductor design companies like MediaTek.

Once the Yongin cluster is completed, a similar semiconductor ecosystem is expected to be established in South Korea. Near Yongin, there are semiconductor production complexes and MPE companies operated by large corporations in Giheung, Hwaseong, Pyeongtaek, and Icheon, and fabless companies are concentrated in Pangyo. The Yongin cluster is expected to complete the entire semiconductor value chain, including memory, foundry, design houses, fabless, and MPE, and become a leading model of a 'global semiconductor cluster' that attracts excellent domestic and international talent.

Foreign media have also given significant coverage to Korea's cluster. Bloomberg reported, "This is the Korean government's most aggressive effort to win the technology hegemony competition," and described Samsung's investment as aligning with Korea's ambition to lead global semiconductor manufacturing. Nihon Keizai Shimbun interpreted it as "Samsung operating cutting-edge factories domestically while securing a certain mass production scale in the US to reduce geopolitical risks."

Samsung Electronics and SK Hynix plan to continuously strengthen cooperation not only with the government but also with local governments. Recently, both companies attended the first meeting of the 'National Advanced Industrial Complex Development Support Task Force (TF)' organized by Yongin City. The meeting reviewed detailed procedures and schedules for the national advanced industrial complex development and checked preliminary matters to shorten the project period. Comprehensive issues such as industrial water and power supply, road and railway infrastructure expansion, compensation and relocation measures, additional plans for developing the hinterland city, and regulations related to installing various infrastructure were also reviewed.