Samsung Electronics is joining a rapidly expanding group of chip manufacturers increasing their investment in semiconductors, spending about $151 billion through 2030.
The ongoing chip shortage impacting the supply chain and an expected 5% increase in semiconductor demand in the next decade is leading to pure play foundries such as Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC) as well as semiconductor firms including Intel Corp. and Samsung to accelerate spending for future chip production.
As part of the investment, Samsung will expedite research of semiconductor process technology and construction of a new production facility. Samsung already allocated about $120 billion toward its logic and foundry business and this ups the total spending by approximately $31 billion. Additionally, the company has begun construction of a new production line in Pyeongtaek, Korea, which is expected to be completed in the second half of 2022. The facility will produce 14 nm dynamic random access memory (DRAM) and 5 nm logic semiconductors based on extreme ultraviolet (EUV) lithography technology.
Samsung said it has been working with various chip design companies, component and equipment makers on what they need for future capacity and the investment will help fuel new industries such as artificial intelligence (AI), 5G and self-driving cars.
“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 Kinam Kim, vice chairman and head of device solutions division at Samsung Electronics. “For the memory business, where Samsung has maintained its undisputed leadership position, the Company will continue to make pre-emptive investments to lead the industry.”
Meanwhile, SK Hynix is looking to double its foundry capacity including domestic facility expansion in South Korea as well as potential merger and acquisition deals, according to YonHap News.
The Korean government is also upping its own investment in domestic semiconductor manufacturing to compete with the U.S. planned investment of $50 billion in chip manufacturing and research as well as the European Union’s plan to produce 20% of all global chips by 2030. Korea plans to offer tax incentives and state subsidies for chip companies to spend a combined $453 billion by 2030.
SK Hynix said the first investment will be an 8 in foundry business to tackle global chip shortages, while helping overseas expansion of domestic fabless companies. The new fab is expected to start construction in 2024 with mass production coming as early as 2025. In total, the company plans to build four additional chip fabs in the Yongin region, south of Seoul.
These companies join Intel's investment of $20 billion in two new fabs at its Ocotillo campus in Chandler, Arizona, TSMC's plans to invest $100 billion over the next three years and UMC's plans to invest $3.6 billion for expansion.