South Korean chip manufacturers are seeking new approaches to production as the global industry is poised to be realigned amid intensifying competition among countries to reinforce their supply chains.

According to industry sources on Thursday, Korean chipmakers such as Samsung Electronics Co. and SK hynix Inc. are considering adjusting their production network by reviewing geopolitical trends.

The chipmakers are pondering over the U.S. request to build dynamic random-access memory (DRAM) chip facilities in a recently announced guideline for incentives.

Under the guideline, the U.S. Department of Commerce proposed three categories for incentives ? the buildup of at least two large-scale leading-edge logic chip clusters by 2030, the development of multiple advanced packaging facilities and DRAM factories, and expansion in the capacity of current-generation or manure node chips.

Korean companies, however, find building advanced DRAM facilities quite challenging given the high production costs in the U.S. The first factory built by Samsung Electronics in Austin, Texas, was supposed to be a DRAM facility but it turned into a foundry due to cost and other issues.

Korean chipmakers are also prudent about their facilities in China.

Samsung Electronics operates a NAND flash and a back-end facility in Xi’an, and a back-end factory in Suzhou in China. SK hynix runs a DRAM and foundry facility in Wuxi, a NAND flash facility in Dalian, and a back-end facility in Chongqing.



SK hynix is focused on completing the second stage of its acquisition of Intel Corp.’s NAND business. The company provided $7 billion in first-stage acquisition funds to Intel for the SSD business and NAND flash factory asset in Dalian.

SK hynix plans to provide $2 billion in March 2025 for the transfer of tangible and intangible assets related to NAND flash wafer research development and Dalian factory operation workforce.

“Samsung Electronics and SK hynix are observed to see a 20 percent decline in production in China in 2024 if they are not able to obtain additional grace period for the maintenance of their chip equipment in China,” said Lee Se-cheol, an executive director of Citigroup Markets Business.

Japan, in the meantime, is rising as an option for chipmakers.

Rapidus, a company established by 8 Japanese entities including Toyota Motor Corp. and Sony Corp., is considering building a factory in Hokkaido in Japan.

Taiwan Semiconductor Manufacturing Company (TSMC), Taiwan-based world’s No. 1 foundry company, has also decided recently to build its second chip plant in Kumamoto in Japan’s southwestern region. The moves come on subsidies offered by the Japanese government.

By Choi Seung-jin and Han Yubin

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]