Korea to build $229 bil. mega chip cluster in Gyeonggi Province by 2042

President Yoon Suk Yeol, third from right in the front, speaks during a meeting at Cheong Wa Dae, the former presidential compound, in Seoul, Wednesday. Joint Press Corp

By Lee Kyung-min

The government will seek 300 trillion won ($229 billion) in investments from the private sector to establish the world's largest high-tech semiconductor cluster in Gyeonggi Province surrounding Seoul by 2042, the trade and land ministries said Wednesday.

The massive investment will be handled solely by Samsung Electronics. The Korean semiconductor powerhouse plans to invest the amount to build the Yongin cluster over the next two decades. Market watchers say this will be a game changer for the Korean firm to challenge the dominant global market presence of its competitor TSMC of Taiwan.

Samsung and TSMC are the only two able to mass-produce chips using the 5-nanometer (nm) process, the latest and the most advanced technology in semiconductor manufacturing. Samsung's strengthening of its foundry facility capacity will drastically increase its competitiveness in technological development, output and subsequent market demand. The cluster will create a Samsung chip belt connecting Giheung, Hwaseong, Pyongtaek and Yongin, fortifying its foundry capacity.

Chipmaking accounts for 5.6 percent of the country's gross domestic product (GDP), 24.2 percent of total facility investment and 19.4 percent of exports.

Wednesday's measure is a long-term step to bolster and integrate the growth driver industry in the areas of memory chips, foundries, design, fabless manufacturing, local parts supply, materials and equipment.

Chief among the priorities is building five logic chip manufacturing plants in a 7.1 million square-meter industrial complex in Yongin, a city in Gyeonggi Province.

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It will become, the government said, a global hub of the mega cluster that will fortify closer cooperation among nearby chip businesses in the province, including a fabless valley in Pangyo and existing smaller industrial chip complexes in Giheung, Hwaseong and Pyongtaek. About 150 leading local and foreign semiconductor firms will be housed there.

The government will invest 25 trillion won to create the Korean version of Interuniversity Microelectronics Centre (IMEC), a Belgium-headquartered international research and development organization where industrial, academic and research experts in 96 economies learn and cooperate in the fields of nanoelectronics and digital technologies.

Fifteen industrial complexes on a combined lot of 47.6 million square meters will be set up across the country to help each of them transition as a growth hub for the areas of future mobility, battery, science and ICT, food, energy, defense, bio cosmetics and natural resources development.

Spearheading the overarching policy drive is a growing concern that major growth driver industries of the export-reliant economy will be impacted significantly in the absence of immediate policy assistance, as indicated by the rapid deterioration of Korea's trade account balance over the past few months. The woes are certain to deepen further by the global wave of protectionism, economic nationalism and intensifying war over hegemony.

President Yoon Suk Yeol said the measures are a declaration that Korea will make a great leap to becoming the global top semiconductor powerhouse, underpinned by an upward spiral of private investments and deregulation.

"High-tech industries are a critical growth engine and national asset," Yoon said during an emergency meeting at the presidential office, Wednesday.

"The super-gap mindset in the chip industry should be extended to artificial intelligence (AI) and battery industries among other future growth drivers. The government will mobilize utmost efforts for the speedy establishment of the said industrial complexes and clusters, led by faster infrastructure building."

The super-gap, a term coined by Kwon Oh-hyun, former Samsung Electronics vice chairman and CEO, means the gap between the top two competitors becomes wide enough that the runner-up cannot even imagine or dare try to challenge or overtake the industry leader.

The government plans to create 10 fabless firms with annual sales of over 1 trillion won.

The semiconductor ecosystem will be fortified by joint technology development and research works among private entities, research institutes and academic institutions within the cluster.

The government will promote core semiconductor technology projects in totaling 3.2 trillion won, for power, future vehicles and AI by 2030.

Tax codes will be revised as soon as possible to increase tax credits. Also revised will be the licensing approval period to make it not exceed 60 days.

The industry ministry plans to draw 550 trillion won investment by 2026 pledged by six high-tech industries. More than half will come from semiconductors (340 trillion won), displays (62 trillion won), rechargeable batteries (39 trillion won), bio (13 trillion won), future mobility (95 trillion won) and robots (1.7 trillion won).