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Korea sets out W300tr plan to build world's largest system chip cluster

Samsung to lead investment in new non-memory chip cluster in Yongin; creation of 1.6m jobs expected

March 15, 2023 - 15:26 By Shin Ji-hye
President Yoon Suk Yeol is briefed on a plan to foster national high-tech industries at a meeting attended by ministers of industry and transport on Wednesday. (Yonhap)

South Korea will build the world's largest high-tech chip cluster in Yongin, Gyeonggi Province, with Samsung Electronics, the world's largest memory chip maker taking the lead in the 300 trillion won ($230 billion) project.

The plan, unveiled during a presidential meeting with Cabinet members on the economy held on Wednesday, is aimed at boosting the nation's competitiveness in the chip industry, particularly in the non-memory chip technology sector such as system chips. It is set to be completed by 2042.

Despite South Korea's world-class manufacturing capabilities in high-tech industries such as memory chips, OLED and secondary batteries, the country lacks competitiveness in system chips, President Yoon Suk Yeol said, addressing the significance of the plan.

Non-memory chips play the role of the brain responsible for processing and calculating information, but Korea's global market share is only 2-3 percent. The new high-tech system chip cluster will be located in Yongin in Gyeonggi Province close by the world’s largest memory chip maker, Samsung Electronics.

“However, system (non-memory) chips, which are relatively weak compared to memory chips, lack the completeness of the industrial ecosystem and chronic labor shortages are the Achilles heel of our high-tech industry,” Yoon said.

Yoon vowed to form a massive ecosystem with related companies located in existing semiconductor manufacturing complexes such as Giheung, Hwaseong, Pyeongtaek, Icheon, Yongin and Pangyo in Gyeonggi Province in order to build the world’s largest chip mega-cluster to surpass Taiwan's Hsinchu Science Park and chip clusters in Texas.

The president said the government has chosen Yongin as the location of the new cluster because the city is the home to Samsung Electronics which is already equipped with a vast number of existing chip businesses.

“We will build a manufacturing plant, manufacturing support facilities and material handling complex to create a large-scale national industry complex centered on foundries,” the president said.

A photo shows an area of Namsa-eup, Yongin-si, Gyeonggi Province, designated as a large-scale system semiconductor national industrial complex on Wednesday. (Yonhap)

Samsung and the government plan to build five high-tech semiconductor manufacturing plants by 2042 and to attract up to 150 domestic and foreign materials, parts and equipment companies and fabless companies. The firm expected to induce direct and indirect production of 700 trillion won and create employment for 1.6 million people in Korea.

Separately, the government will create 14 new national high-tech industrial complexes with an area of 33 million square meters in the provinces to foster high-tech industries such as space, future cars and hydrogen.

Yoon said high-tech industries are key growth engines, security and strategic assets and are directly related to our jobs and livelihoods.

“Recently, the economic battlefield that started with semiconductor is expanding to the entire high-tech industry, including batteries and future cars,” Yoon said. “Countries are spending large-scale subsidies and tax support to attract high-tech manufacturing facilities to their own countries.”

Nothing South Korea's world-class technology and production capabilities, Yoon vowed to firmly support private investment for further growth.

“What matters is speed,” Yoon said. “The government will do everything in its power to expedite the creation of the national high-tech industrial complex announced today.”

Yoon hoped that the related act to expand tax credit for high-tech industry facility investment will be passed as soon as possible.

Specifically, the 14 national high-tech industrial complexes include nano technology, semiconductor, aerospace, future mobility, hydrogen and secondary battery in South Chungcheong Province. They also include core parts for future vehicles, space launch vehicles, and hydrogen storage and utilization manufacturing in Honam, which refers to Gwangju, the South Jeolla and North Jeolla Provinces.

The Yeongnam region, which includes the modern-day provinces of North and South Gyeongsang and the self-governing cities of Busan, Daegu and Ulsan, will have complexes for defense and nuclear energy, future automobiles, robots and biopharmaceuticals, as well as a small module nuclear power plant.

At the meeting, private companies announced that they plan to invest a total of more than 550 trillion won in six high-tech industries, including system chips, displays, secondary batteries, bio, future cars and robots, by 2026.

The meeting was attended by Chey Tae-won, chairperson of SK Group and the Korea Chamber of Commerce and Industry; Koo Ja-yeol, chairman of LS Group and the Korea International Trade Association; Kim Byong-joon, acting chairman of the Federation of Korean Industries; and chief executives from Samsung Electronics, SK, LG, Hyundai Motors and GS Construction.