Samsung Electronics Co. will invest 300 trillion won ($228.1 billion) by 2042 as part of South Korea’s plan to build the world’s largest semiconductor cluster in the Seoul metropolitan area to help the world’s biggest memory chip maker strengthen its competitiveness against its rivals.

Over the next 20 years, the chipmaker plans to build five advanced chip fabrication facilities and attract about 150 related businesses, including materials, parts & equipment and fabless makers to the seven-million square meter cluster in Yongin, 40 kilometers south of Seoul, Samsung Electronics said Wednesday.

Samsung Electronics’ investment is expected to generate some 700 trillion won in direct and indirect production and create about 1.6 million new jobs.

The Yongin chip facilities will be part of the mega-cluster that connects existing chipmaking complexes in Giheung, Hwaseong, Pyeongtaek and Icheon, as well as materials, parts & equipment and fabless makers in Pangyo.

“Samsung Electronics will be ahead of its competitors, widening its lead in the memory chip industry and strengthen competitiveness in the foundry market,” one industry source said. “Having design houses, fabless, materials and parts & equipment companies together in the mega-cluster will have synergies, helping the Korean chipmaking ecosystem to leap forward.”

The Yongin cluster could be a breakthrough for Samsung Electronics and its chipmaking strategy. Currently, the electronics giant has three domestic chip fabrication facilities -- Giheung campus that houses foundry and LED plants, Hwaseong campus that has DRAM, NAND flash and foundry facilities, and the Pyeongtaek campus that houses DRAM, NAND flash and foundry facilities.

Samsung Electronics has pushed forward with its “shell first” strategy even when the chip market was sluggish. After cleanrooms are built first, fab equipment can be installed later and set up flexibly as needed in line with future demand. Through this, the company can better respond to customers’ demands.

Samsung Electronics’ U.S. chip fabrication site in Taylor, Texas is now 43.8 percent complete at the end of last year and its fourth plant in Pyeongtaek is 21.3 percent complete, according to a recent regulatory filing by Samsung C&T Corp. that is building the facilities. The fourth Pyeongtaek plant aims to be completed by October 2024.

Samsung Electronics’ plan to form a system semiconductor cluster in Yongin appears to show the company’s intentions to widen it lead in the memory chip market and to help it narrow the gap with its bigger rival Taiwan Semiconductor Manufacturing Co. in the foundry business. The facility will also give the tech giant a triangular mega-cluster in the Seoul metropolitan area.



Samsung Electronics’ foundry facilities are in Giheung, Hwaseong, Pyeongtaek and Austin. Its fabrication capacity is still lags behind global demand, even when including the Austin plant currently under construction, the company said. The Korean tech giant and its Taiwanese rival are the only two foundry companies in the world that are capable of the 5 nanometer (nm) process. One nanometer is 1/1,000,000,000 of a meter.

In June, Samsung Electronics started the operation of its 3 nm process with gate-all-around (GAA) transistors for the first time in the world, getting ahead of its Taiwanese rival, which plans to apply the next-generation transistor tech to its 2 nm process. However, Samsung Electronics has not successfully overcome the gap in production with the market leader. According to Taiwanese market tracker TrendForce, TSMC accounted 58.5 percent of the market in the fourth quarter and Samsung Electronics 15.8 percent.

The Yongin cluster could be a win-win public-private partnership for the Korean government, seeking to defend the country’s global leading position in semiconductors, and for Samsung Electronics to take the lead in the global system chip market. The Korean government seems to be willing to provide more support to the domestic semiconductor industry, as TSMC has grown on the back of government support.

The semiconductor industry is the mainstay of the Korean economy and makes up a core asset of the country’s security, accounting for 5.6 percent of gross domestic product, 24.2 percent of national facility investments and 19.4 percent of the country’s exports in 2020. Countries such as the U.S., China, Japan and Taiwan all make fairly large investment into their own chip clusters as well as attract foreign investment.

“Building a mega chip cluster, upgrading value chain, securing next-generation chip technologies and expanding manpower in the system semiconductor industry will all help create a firm ecosystem for the domestic semiconductor industry,” the Korea Semiconductor Industry Association said.

By Choi Seung-jin and Chang Iou-chung

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