Samsung announces plans to invest $231 billion in South Korea's semiconductor hub

(image credit: bbc.com)

Samsung, the world's largest maker of memory chips, smartphones, and TVs, has announced plans to invest around 300tn won ($230.8bn; £189.6bn) over the next two decades to support the South Korean government's push to create a mega semiconductor hub in the country. The investment will be used to construct five chip factories, according to the company's statement to the BBC.

The move is part of an official plan to offer incentives such as tax breaks and infrastructure support to companies in high-tech industries. The South Korean Ministry of Trade, Industry and Energy said in a statement that the "mega cluster will be the key base of our semiconductor ecosystem" and it aims to secure around 550tn won in private-sector investment to become "a leading country in the middle of fierce global competition over advanced industries."

South Korea's effort to establish a semiconductor hub follows the footsteps of Taiwan's successful strategy of creating a massive semiconductor cluster through science parks. According to Paul Triolo, from the global advisory firm Albright Stonebridge Group, major players in the semiconductor sector are increasing their efforts to boost onshore manufacturing.

Semiconductors, which power various devices from smartphones to military equipment, are at the centre of a contentious dispute between China and the US. Washington announced in October that licences would be required for firms exporting chips to China that use US tools or software, regardless of where they are made in the world. Recently, the Netherlands announced its plan to restrict its "most advanced" microchip technology exports to protect national security. South Korea's trade ministry has also raised concerns over the US policy on semiconductors, citing potential business uncertainties, violation of companies' management and technology rights, and making the US less attractive as an investment option.

China has repeatedly called the US a "tech hegemony" in response to Washington's export controls. South Korea is home to other significant microprocessor manufacturers such as SK Hynix. The South Korean government hopes that its investment and incentives plan will attract other companies, both upstream and downstream in the supply chain, to the proposed semiconductor hub.