Global chip investment battle heats up while Korea offers cold shoulder

Home > Business > Industry

Global chip investment battle heats up while Korea offers cold shoulder

Published: 11 Oct. 2023, 17:41 Updated: 11 Oct. 2023, 19:29

SHIN HA-NEE
[email protected]

Samsung Electronics' NAND flash memory chip production facility in Xi'an, China [SAMSUNG ELECTRONICS]

Amid the heated chip race across the globe, countries are revving up support to lure investments to their home turf.

In Korea, however, chipmakers are still left to shoulder the burden largely on their own.

Major economies such as the United States, China and Japan are offering supportive measures to stimulate investments in the semiconductor sector including tax cuts, subsidy handouts and infrastructure support, as they are vying for leadership in advanced chip technologies.

Capital-heavy infrastructure projects, in particular, are often led by local or central government.

Samsung Electronics’ chip plant in Austin, Texas, is one example.

In Austin, the local government handles the construction and operation of infrastructure facilities for power, water supply and wastewater discharge, while the companies that use such facilities are only required to pay the usage fee.

China’s industrial parks, such as Xi’an and Wuxi, also offer similar supportive measures for chip companies, as the country is pouring millions and billions of yuan to ramp up semiconductor capabilities.

Taiwan, home to the world’s largest chip foundry TSMC, provides complimentary power and water supply as well as wastewater discharge facilities for companies located at its industrial parks. Companies with advanced technologies are also eligible for rent exemption for up to five years.

Moreover, Japan provides funding for half of the budget allotted for semiconductor projects by overseas chip foundries. TSMC, for example, was granted 50 percent funding from the government for its 800-billion-yen plant in Kumamoto, Kyushu.

Meanwhile, companies building new plants in Korea are given little support in terms of infrastructure establishment.

For instance, at Samsung Electronics’ operation in Pyeongtaek, Gyeonggi, the company paid for almost all of the infrastructure facilities for power supply, water supply and wastewater discharge.

While the government covered up to 51 percent of spending for infrastructure construction projects in their initial phase, from the second phase, most of the expenditures were covered by the company.

Complex regulatory systems and the issue of local acceptance also weigh down on the process. Samsung Electronics’ P3 production line at Pyeongtaek site, which is the largest chip manufacturing facility in terms of capacity, took 12 months for the construction of the building. However, it took five years for the project to obtain government approvals and establish infrastructure for the plant.

“Samsung Electronics has been at the top spot in the memory chip segment for such a long time that the government seems to be lacking urgency,” said Ahn Ki-hyun, executive director of the Korea Semiconductor Industry Association.

“We might lose our leadership anytime if countries that hadn’t been prioritizing the chip sector before begin to offer massive support programs,” cautioned Ahn.

BY LEE SO-AH [[email protected]]