Samsung ups its investment in non-memory chips

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Samsung ups its investment in non-memory chips

President Moon Jae-in, fourth from right, poses with participants of an event designed to promote the importance of chip production in Korea at Samsung Electronics' chip complex in Pyeongtaek, Gyeonggi. [YONHAP]

President Moon Jae-in, fourth from right, poses with participants of an event designed to promote the importance of chip production in Korea at Samsung Electronics' chip complex in Pyeongtaek, Gyeonggi. [YONHAP]

 
Samsung Electronics will spend 171 trillion won ($151 billion) to ramp up production of microprocessors by 2030, an attempt to reduce its dependence on memory chips.
 
That represents an additional investment of 38 trillion won compared to plans announced in 2019.  The new investment plan was disclosed Thursday during President Moon Jae-in’s visit to the chipmaker’s plant in Pyeongtaek.
 
Samsung Electronics did not confirm a major investment in a second plant in Texas, although it is expected to announce a decision in coming weeks.  
 
The mega investment by Samsung will be primarily used to set up facilities to make non-memory chips such as central processing units for computers, application processors for smartphones and camera sensors. It will also expand its foundry business, or making chips on contract based on the designs from customers.
 
Broadening Korea's semiconductor industry beyond memory chips is a policy goal of the Moon government, and will bring Samsung into greater competition with companies like TSMC in Taiwan.

 
“The entire semiconductor industry is facing a watershed moment and now is the time to chart out a plan for long-term strategy and investment,” said Kim Ki-nam, a vice chairman who heads the semiconductor business for Samsung Electronics.  
 
The company also announced it has begun construction of a third chip plant at the Pyeongtaek complex, which it hopes to complete by the second half of 2022.  
 
The newest  facility will manufacture memory chips like dynamic random access memory (DRAM) and processing chips based on a 5 nanometer process. Those chips will be fabricated with cutting edge lithography technique called extreme ultraviolet (EUV).  
 
Other semiconductor companies announced new plans on the occasion of Moon's visit to Pyeongtaek.
 
ASML, the sole maker of EUV machines, will spend 240 billion won to build a training center for its corporate clients in Hwaseong, Gyeonggi.  ASML is headquartered in the Netherlands.
 
SK hynix vowed to double production capacity for its foundry business, marking a move away from dependence on memory chips.  
 
“SK hynix is considering feasible plan to double its foundry capacity,” said Park Jung-ho, Vice Chairman of the company, during the presidential visit, adding that it is looking into expanding facilities or mergers and acquisitions in line with that strategy.
 
SK hynix will invest in foundry work based on 8-inch wafers.  Currently the foundry business accounts for less than 5 percent of SK hynix's revenues.  
 
The company runs a foundry business through SK Hynix System IC, which recently relocated its factory to Wuxi, China from Cheongju.  
 
To cope with a shortage of chips in the automobile industry, Samsung Electronics, Hyundai Motor and local research institutes agreed to collaborate on developing advanced car chips in Korea.  
 
While both the government and companies declined to specify details, the Industry Ministry explained that the partnership will “provide an opportunity to effectively respond to the supply issue of auto chips among the government, industry and institutes."  
 
President Moon thanked the semiconductor companies for the large investment commitments. “They are investing over 510 trillion won over the next 10 years,” he said in a speech during the visit.  
 
“I pay my respect to the companies for their courage to challenge uncertainty with more aggressive and preemptive investments.”  
 
Moon attended the event to announce a national strategy for semiconductor industry with about 70 high-profile guests including business leaders, government officials, politicians and scholars.  
 
At the event, Moon stressed that Korea must seize the opportunity to dominate the global supply of semiconductors through big and aggressive investments. While Korea, the United States and Taiwan have been leaders of the global semiconductor market, other companies are making massive investments to dominate the market.  
 
Moon said the government announced a national strategy and vision for non-memory semiconductors in 2019, and the government and private sector have worked together on it. “Korea recorded $30 billion export of non-memory chips last year, making it one of the five largest export products,” he said. “Exports of all types of semiconductors grew for 10 consecutive months and this year’s exports are expected to be more than $100 billion.”   
 
Semiconductors are becoming a geopolitical issue among countries, going beyond competition among companies, Moon said.  
 
Moon’s visit to Samsung Electronics’ facility came at a sensitive time, as the company is facing growing pressure to make investment in the United States.  
 
According to a Bloomberg report earlier this week, the U.S. government invited Samsung to a meeting of global tech giants to discuss a plan to increase semiconductor supplies in the United States.  
 
The meeting, reportedly scheduled for May 20, is taking place on the eve of Moon’s White House summit with U.S. President Joe Biden. Moon is scheduled to meet with Biden on May 21.
 
BY PARK EUN-JEE, SER MYO-JA [park.eunjee@joongang.co.kr]
 
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