South Korea Will Create World's Largest Chip Production Center

South Korea will invest 300 trillion won ($230 billion) to build the world's largest semiconductor production center on the outskirts of Seoul as part of a strategy to boost the country's competitiveness, the Ministry of Industry stated Wednesday.

The project plans for the construction of a new complex in Seoul Capital Area by 2042, which would include five advanced chip manufacturing facilities and 150 materials, components, and fabless companies.

The government announced on Thursday that it will assist in the establishment of the world's largest semiconductor supply chain in Korea by 2030, in collaboration with private sector firms such as Samsung Electronics and SK hynix, in order to make the country a global leader in both memory and system chips.

To achieve this auspicious aim, the administration said that it will grant massive tax breaks to corporations building semiconductor facilities after chip makers promised to invest more than 510 trillion won ($450 billion) in this and research and development  R&D by the target year.

The government would offer tax credits of between 40 percent and 50 percent for investments into R&D projects for new chip technology and from 10 percent to 20 percent for expenditure on new factories.

Under the plan, the government stated it will build a so-called "K-Semiconductor Belt" in the western portion of the nation combining Pangyo, Giheung, Hwaseong, Pyeongtaek and Onyang, and the central area linking Icheon, Yongin and Cheongju. The belt will cover all aspects of the semiconductor industry, including production, materials, components and equipment, and design.

The plan was announced at a ceremony attended by officials from the government and private sector, including President Moon Jae-in, Deputy Prime Minister Hong Nam-ki, Samsung Electronics Vice Chairman Kim Ki-nam, and SK hynix Vice Chairman Park Jung-ho, at Samsung Electronics' semiconductor plant in Pyeongtaek, south of Seoul.

"Countries around the world are fiercely competing to reorganize their own supply chains. The direction we need to go in is clear. We are trying to make this opportunity ours by making preemptive investments that will not be shaken by external shocks, and strengthening the domestic industrial ecosystem to lead the global supply chain," Moon made the remarks during a speech at the plant.

In response to the government's ambition for the country to be a worldwide chip powerhouse by 2030, the world's Nos. 1 and 2 memory chip producers, Samsung Electronics and SK hynix, welcomed the support and revealed their investment plans.

Samsung announced an extra 38 trillion won investment to position itself as a leader in both the memory and system semiconductor industries, increasing its total long-term investment to 171 trillion won. In 2019, the firm declared it will invest 133 trillion won in its semiconductor industry by 2030.

"The entire semiconductor industry is facing a watershed moment and now is the time to chart out a long-term strategy and investment plan," Samsung's Kim said.

Samsung recently hosted a ceremony with Hyundai Motor and the Ministry of Trade, Industry, and Energy in which they pledged to work together to solve the automotive chip scarcity problem, which has been weakening productivity in the global auto sector. But specifics have yet to be released, the industry ministry said the deal will be a cornerstone in deepening collaboration.

In addition, SK hynix will treble its capacity in the 8-inch foundry industry to support the development, mass manufacturing, and worldwide market expansion of local fabless companies.

Important News and Blog Tags for Readers

World's largest semiconductor production center

Semiconductor supply chain in Korea

K-Semiconductor Belt

Worldwide chip powerhouse

Hyundai Motor and the Ministry of Trade