Samsung Electronics has drastically increased the amount it plans to invest in system semiconductor. Rather than $120 billion (38 trillion KRW) which was the original amount, it plans to invest $150 billion until 2030. Also, it has decided to start the construction of the P3 fab in Pyeongtaek that will be the biggest single fab in the world. These decisions are part of its plan to become the top system semiconductor manufacturer in the world by 2030 and to maintain a super gap in the memory industry, and it plans to strengthen the foundation of the manufacturing industry in South Korea while restructuring of global semiconductor supply chains has emerged as a hot topic.
Samsung Electronics made an announcement on Tuesday at the Pyeongtaek Campus that it would invest $150 billion in system semiconductor until 2030.
The revised amount is $34 billion (38 trillion KRW) more than the initial amount that it planned to invest initially.
“We have decided to increase the amount of investment in order to secure leadership in the system semiconductor industry early.” said Samsung. “We plan to spur R&D of advanced foundry processes and construction of production lines even more.
The company did not explain how it is going to utilize the investment. However, it is expected that the company will utilize a significant portion of the investment in development of advanced foundry processes.
In fact, the company announced that it will begin the construction of the P3 fab and it plans to complete the construction by the second half next year. The P3 fab is the company’s newest semiconductor fab that is being built in Pyeongtaek. Normally, a semiconductor fab is built first and necessary equipment is brought in afterwards according to products that will be manufactured and the fab’s size. The fact that the company announced that it would complete the construction by the second half next year indicates that it has almost completed its plan for equipment that needs to be brought into the P3 fab.
According to the industry, it is reported that Samsung Electronics plans to build foundry production lines and DRAM production lines. It is likely that the 5nm process will be used for the foundry production lines while the EUV (extreme ultraviolet) process is expected to be used to manufacture DRAMs.
The 5nm process is the most advanced technology that is currently commercialized for foundry. Only TSMC and Samsung Electronics have secured the technology. By utilizing the 5nm process, a company can reduce the area of logic chip by 25% compared to using the 7nm process.
EUV light source has a wavelength that is about one-tenth of that of ArF light source and it is more advantageous in materializing very small circuit patterns. The EUV process can improve performance and productivity of semiconductors. However, the entry barrier is very high as the process requires very advanced technologies and an EUV lithography system that costs about $130 million (150 billion KRW). All these factors mean that Samsung Electronics will be able to further distance itself from businesses that have just entered the market.
Through the P3 fab, Samsung Electronics plans to become the top system semiconductor business in the industry and carry out a ‘super gap’ strategy when it comes to the memory industry.
It is expected that the fab will manufacture about 300,000 12-inch wafers per month. It is also expected that Samsung Electronics will invest the most amount in a single fab it has ever invested for the P3 fab.
The fab is about 700 meters long and has a total area of 700,000 m2. Because it is 1.75 times bigger than the P2 fab (400 meters long) that Samsung Electronics invested $27 billion (30 trillion KRW) in, it is expected that Samsung Electronics will invest about $35 billion (40 trillion KRW) in the P3 fab.
Although promoting South Korea’s semiconductor industry according to the South Korean government’s K-semiconductor strategy is one of the reasons why Samsung Electronics has decided to increase its investment in system semiconductor and start the construction of the P3 fab, another reason why it has made these decisions is because it wants to grab an upper hand of the market in the future.
In case of the system semiconductor, TSMC is currently running away in the foundry market. Also, Intel made it clear that it would strengthen its investment in related technologies for a rebuild. On top of that, the United States and China see their respective semiconductor industries as key industries that are deeply related to their national security.
Although Samsung Electronics currently stands at the top of the memory market, it has been constantly challenged by other businesses. While it has become more difficult to speed up development of new products as they require very advanced technologies, other companies such as SK Hynix and Micron have constantly pressuring Samsung Electronics by developing next-generation products faster than Samsung.
Samsung believes that bold and daring decisions will help the company overcome this upheaval. Kim Ki-nam, who is the vice chairman of Samsung Electronics, said that South Korea’s semiconductor industry is standing on top of a great turning point and that this is the time to establish foundation for long-term visions and investments. He also said that the company would continue to march forward boldly towards the future even if it is currently facing huge challenges.
It will be interesting to see whether Samsung Electronics’ decision to increase its investment in system semiconductor will lead to increased investment in the U.S. market as well. The company currently has a foundry fab in Austin, Texas. Although it was preparing to build more lines at the fab, its final decision has been postponed as it still has to discuss tax support issues with authorities from the U.S. government.
President Moon of South Korea is scheduled to have a first summit with President Biden on May 21 and it is reported that Vice Chairman Kim Ki-nam of Samsung Electronics will be part of South Korea’s economic delegation party. It is expected that it will not be long before Samsung Electronics begins to invest in the U.S. market as President Biden is pushing to strengthen semiconductor production in the country in order to solve the insecurity about supply and demand of semiconductors.
Staff Reporter Yun, Geonil | email@example.com