Samsung raises non-memory chip investment to $151bn as S. Korea offers bigger tax breaks

By Ashika Rajan, Trainee Reporter
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The South Korean multinational conglomerate, Samsung Electronics has announced that it would increase its non-memory chip investment to $151 billion by 2030, joining a flurry of companies ramping up investment in the face of a global semiconductor shortage.

Countries have also been working to strengthen chip supply chains, as the chip shortage has hampered development in industries like automobiles.

South Korea announced that it would offer tax cuts and provide $883 million in loans to the country’s chip industry.

Some 153 chip companies including global No.1 and 2 memory chip makers Samsung and SK Hynix already have plans to invest a combined $450 billion or more between this year and 2030, according to the Korea Semiconductor Industry Association.

Samsung’s increased investment target, which is up from $117 billion revealed in 2019, will be used to help the company achieve its goal of becoming the world’s top logic chipmaker by 2030. It wants to compete with Taiwan’s TSMC in contract chip manufacturing and Qualcomm in mobile processing chips.

Samsung also said in a statement that its third chip production line, which is the size of 25 football fields and is located south of Seoul, will be completed in the second half of 2022.

South Korean President Mr. Moon Jae-in said that “countries around the world have entered the fierce competition by reorganizing supply chains around their own country. We need pre-emptive investments to strengthen the domestic industrial ecosystem and lead the global supply chain to make this opportunity ours.”

In the second half of 2021 and 2024, South Korea will raise tax breaks for large companies conducting “key strategic technology,” such as semiconductors, to 6 percent from the current 3 percent or lower, according to a statement from the Ministry of Trade, Industry, and Energy.

The government will provide approximately $882 billion in long-term loans to expand 8-inch wafer chip contract manufacturing capability as well as materials and packaging investment.

It also increased the number of chip industry employees trained to 36,000 by 2030, more than double the previous goal of 2019.

Mr. Jinwook Burm, Head of the Institute of Semiconductor Engineers remarked that “Setting up an environment where smaller fabless firms can thrive, with plenty of workforce and foundries, would naturally bolster system chip industry.”

US President Mr. Joe Biden flagged plans to invest $50 billion in semiconductor manufacturing and research in March.

Chips are South Korea’s most common export, accounting for roughly 20 percent of total exports.

Samsung, Hyundai Motor, the ministry, and industry associations agreed to work together to address the shortage of auto chips, according to a statement from the presidential office.

Related: Samsung dethrones Apple in global smartphone shipment leadership