Semiconductor 'War of Money'... Investment Competition Among Countries as Samsung and Hynix Falter (Comprehensive)

Record High Investment Expected This Year Surpassing 229 Trillion Won
Semiconductor Companies from the US, Taiwan, Japan, and Others Announce Bold Investments

A production line of a semiconductor factory (Asia Economy DB)

[Asia Economy Reporter Park Sun-mi] As semiconductor manufacturers worldwide have made bold capital investments to meet surging demand, the scale of semiconductor investment this year is expected to surpass 229 trillion won. This marks the largest scale ever, a 24% increase compared to last year's investment amount.

On the 3rd, semiconductor market research firm IC Insights forecasted that global semiconductor industry capital expenditures on equipment investment will reach $190.4 billion (approximately 229.24 trillion won) this year, a 24% increase from last year. Before the COVID-19 outbreak, semiconductor investment in 2019 was only $102.5 billion, a 3% decrease from the previous year, but it surged to $113.1 billion in 2020, a 10% increase, and $153.9 billion in 2021, a 36% increase.

This year's investment scale is expected to be the largest ever, increasing by 86% compared to 2019. If this trend continues, the investment amounts from 2020 to 2022 will mark the first time in 27 years since 1993-1995 that there have been three consecutive years of double-digit growth rates in equipment investment.

The surge in semiconductor orders is due to increased demand for electronic devices following the spread of COVID-19, as well as the acceleration of non-face-to-face and digital transformation. The ongoing semiconductor supply-demand imbalance reflects the industry's strong commitment to actively increase supply.

Factory Utilization Rate Reaches 100%... Bold Investments Anticipated

With explosive semiconductor demand, the factory utilization rate in the semiconductor fab industry has reached 90%, and the factory utilization rate in the semiconductor foundry (system semiconductor contract manufacturing) industry has reached 100%.

IC Insights projected that the top 13 semiconductor companies, expected to increase their capital expenditures by more than 40% compared to last year, will pour in $91.8 billion this year. This is 2.5 times the investment amount in 2020. These 13 companies also spent $60.6 billion last year, investing 62% more than in 2020.

In particular, bold investments are anticipated from the foundry industry this year. TSMC of Taiwan, the world's number one foundry in market share, plans to invest $42 billion this year, a 40% increase from last year. Taiwan's UMC and the U.S.'s GlobalFoundries, ranked third and fourth respectively, are expected to invest $3 billion and $4.5 billion, increasing their investment amounts by 71% and 155% compared to last year. Intel, which declared entry into the foundry market last year, also plans to invest $27 billion this year, a 44% increase from last year.

However, Samsung Electronics, ranked second in foundry market share, already made semiconductor investments amounting to 43.6 trillion won last year, so it did not rank among the top companies with the highest investment growth rate this year. IC Insights noted, "Among the top companies increasing investments this year are major foundry firms such as TSMC, UMC, and GlobalFoundries, but it is noteworthy that the 'Big 3' memory semiconductor companies Samsung Electronics, SK Hynix, and Micron are not on the list."

Global Governments Fully Supporting Semiconductor Investment... What Are Korea's Weaknesses?

The atmosphere of active government support for semiconductor investment worldwide poses a challenge to Korea's semiconductor industry. On the 1st, U.S. President Joe Biden, in his first State of the Union address since taking office, urged Congress to pass a bill investing $52 billion in the semiconductor industry.

If the related bill is finally passed, subsidies and other benefits will be available not only to U.S. companies like Intel but also to companies planning to build cutting-edge semiconductor factories in the U.S. The Semiconductor Industry Association (SIA) analyzed that if the $52 billion semiconductor support program is launched, 19 production facilities will be established in the U.S. over the next 10 years, and the U.S. will capture 24% of new global production capacity.

As global competition over semiconductor supremacy intensifies, the Korean government also announced support to enable the semiconductor industry to invest more than 56 trillion won and pursue a superlattice strategy. The industry emphasizes that bold government support such as talent development, tax benefits, and exemption from preliminary feasibility studies is necessary to secure competitiveness.

Shinhan Investment Corp., in its report titled "The Path Forward for Korean Semiconductors," stated, "the semiconductor market is dominated (82%) by four countries: the U.S., Korea, Taiwan, and Japan," and added, "Korea's strength lies in fab manufacturing and memory, making it the world's strongest semiconductor country, but it is isolated among the world's four major semiconductor powers." It pointed out that "the value chain including equipment, materials, components, post-processing, and design capabilities are weak, and there are no strategic cooperation partners to complement these. Memory requires securing design capabilities, but there is also a lack of active incentives to attract talent."

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