Samsung's Giant Leap... Memory and System Simultaneous Domination '171 Trillion Won Plan' Start

Unprecedented Semiconductor Investment
R&D and Expansion in Line with K-Semiconductor Strategy

President Moon Jae-in is taking a commemorative photo with attendees after the "Semiconductor Ecosystem Strengthening Solidarity Cooperation Agreement Ceremony" held on the outdoor stage set up at the Samsung Electronics Pyeongtaek Complex Line 3 construction site in Pyeongtaek, Gyeonggi Province, on the afternoon of the 13th during the "K-Semiconductor Strategy Report."
[Image source=Yonhap News]

[Asia Economy Reporters Heungsun Kim and Hyunjin Jung] "In the semiconductor industry, which requires cutting-edge processes, segmented technological expertise, and large-scale facilities and investments, excelling in both memory and system semiconductor sectors is not easy and unprecedented."

This summarizes the semiconductor industry's evaluation of Samsung Electronics' strategy related to the government's 'K-Semiconductor Strategy.' Samsung Electronics has thrown down the gauntlet to challenge an uncharted territory by pledging to enhance competitiveness not only in memory semiconductors, where it leads the global market, but also in the system semiconductor sector, encompassing design, manufacturing, and new technology competition, contributing to South Korea's leap as a comprehensive semiconductor powerhouse.

"Unmatched Super-Gap + Aggressive Investment"
Fierce Pursuit of Memory Latecomers... Next-Generation Technology Gamble with CXL DRAM

Summarizing Samsung Electronics' revised 'System Semiconductor Vision 2030' plan announced on the 14th, the strategy can be condensed as 'not allowing competitors to catch up in memory and compensating for disadvantages in systems through aggressive investment.' Samsung declared it will invest 171 trillion KRW in system semiconductors by 2030. This is an increase of 38 trillion KRW from the 133 trillion KRW announced in the 2019 'System Semiconductor Vision 2030,' aiming to secure system semiconductor leadership early.

The investment will be used for advanced process R&D and production line construction in the core foundry (semiconductor contract manufacturing) sector of system semiconductors. In the second half of 2022, Samsung plans to complete and start production at Pyeongtaek Line 3 (P3), the world's largest single semiconductor line, equivalent to the size of 25 soccer fields. This site is expected to mainly use advanced processes with extreme ultraviolet (EUV) equipment costing over 200 billion KRW per unit. Industry insiders estimate the total investment in P3 will exceed 50 trillion KRW.

Additionally, Samsung plans to strengthen collaboration with fabless (semiconductor design) companies and material, component, and equipment firms to nurture the domestic system semiconductor ecosystem. According to market research firm Omdia, Samsung holds a 16.4% share of the global foundry market as of Q4 last year, ranking second worldwide, but Korea's share in the fabless market is only 1.5%, showing weak competitiveness. Professor Jo Junghwi of Incheon National University's Embedded Systems Engineering Department noted, "The fabless sector, which is the customer of foundries, must grow for mutual growth. Currently, major fabless companies are concentrated in the U.S., so nurturing domestic customers to some extent is necessary to gain competitiveness."

Samsung Electronics ranks first globally in memory semiconductors such as DRAM and NAND. However, latecomers are fiercely pursuing by narrowing the technology gap with advanced processes. Samsung has made a strategic move with next-generation technologies that expand data processing and storage capacity. Notable examples include the AI memory 'HBM-PIM,' capable of simultaneous data storage and computation introduced in February, and this month, the 'Compute Express Link (CXL) DRAM,' which overcomes the capacity limits of existing DRAM, showcasing future memory solution technologies. Kim Ki-nam, Vice Chairman of Samsung Electronics' Device Solutions (DS) division overseeing semiconductor business, emphasized, "We will lead investments to create an 'unmatchable super-gap' in the memory sector, where Korea has consistently maintained the lead."

Tens of Trillions in Investment Competition
Strengthening Domestic Foundry "Speed is Key"

Global competitors are also pressuring Samsung Electronics by announcing investment plans worth tens of trillions of KRW annually. Taiwan's TSMC, the world's number one foundry, declared it will invest 100 billion USD (about 113 trillion KRW) in this sector over the next three years. Additionally, it plans to expand its Arizona plant from one to six facilities.

U.S. Intel, which has focused on the central processing unit (CPU) sector, is also investing 20 billion USD (about 23 trillion KRW) to build two production facilities in Arizona for its foundry business. It plans to invest 3.5 billion USD (about 4 trillion KRW) in a New Mexico facility to expand semiconductor packaging capabilities. Compared simply to Samsung's 171 trillion KRW investment plan over ten years for system semiconductor development, these amounts surpass Samsung in terms of scale.

However, the industry evaluates Samsung's investment as substantial, considering that unlike TSMC and Intel, Samsung operates both memory and system semiconductor businesses and also runs finished product (set) businesses. Last year, Samsung focused 32.9 trillion KRW of its total 38.5 trillion KRW facility investment on semiconductor equipment, expanding related investments.

An Ki-hyun, Executive Director of the Korea Semiconductor Industry Association, said, "Even if investment plans for foundries are announced, it takes several years to complete manufacturing facilities," adding, "The competition in 'speed' to quickly build infrastructure and secure supply is much more important than the investment amount."

This content was produced with the assistance of AI translation services.