Samsung’s US semiconductor investment is likely to reach 30 trillion… “’The best foundry’ release sheet”

There is a series of foreign reports saying that Samsung Electronics is considering new and expanded semiconductor factories in the United States. The US Wall Street Journal reported on the 22nd (local time) that “Samsung Electronics is considering building a semiconductor production line in Texas, Arizona, and New York, spending 17 billion dollars (about 18 trillion won).” On the same day, Bloomberg News reported, “Samsung Electronics plans to expand its foundry (consignment production) line at its Austin, Texas plant by investing more than 10 billion dollars (about 11 trillion won).”

On the 24th, Samsung Electronics responded cautiously, saying, “The scale or timing of the investment has not been decided.” But inside and outside the company, “If you don’t invest now, you can be pushed forever by competitors. It is very likely”.

With the expansion of the fifth generation (5G), artificial intelligence (AI), autonomous driving, and the cloud, the global semiconductor market is predicting a’super cycle (long-term super boom).’ Moreover, the possibility that Intel, which was called’Semiconductor Supreme’, will partner with Samsung Electronics as a foundry partner has increased. This is the background of Samsung’s’US investment theory’.

Austin, the capital of Texas, is the political base of the family of former US President George W. Bush. Samsung has been close to the rich son of Bush since the days of late Chairman Lee Kun-hee. When Samsung Electronics completed its Austin plant in 1998, Bush’s son, former President George W. Bush, served as governor of Texas. His son, Bush, provided corporate tax cuts and infrastructure such as roads, water and electricity. This relationship continues with Lee Jae-yong, vice chairman of Samsung Electronics.

Meanwhile, Austin has grown to the point of being called’Silicon Hills’ in Silicon Valley, a symbol of information technology (IT). Apple and General Motors Research Institutes have flocked, and Oracle announced that it is moving its headquarters. There is no personal income tax or corporate tax in Texas, so the tax burden is low, and high-quality talent is produced at Texas State University and Rice University.

The same goes for Samsung Electronics’ Xian factory in China’s Shaanxi Province. Samsung selected Xi’an because the production bases of global IT companies are located in the vicinity. However, the fact that the hometown of Xi Jinping’s father, Shi Joong Xun, who took office in China in 2013 is also considered as a background.

This means that semiconductor investment is that much political. Lee Jong-ho, head of Seoul National University’s Semiconductor Research Institute, said, “From the US point of view, Samsung Electronics, which is the two largest foundry mountain range, has’North Korea risk’, and TSMC in Taiwan has’China risk’ in a trade conflict with the US. In order for the processing unit (APU) to be stably produced, a domestic production base is essential.” In particular, this voice grew as they experienced a supply chain blow in the aftermath of Corona 19.

U.S. President Joe Biden maintains the stance of the return (reshoring) policy of overseas companies promoted by his predecessor, President Trump. His presidential pledge was’Made in All of America’. A bill has also been proposed to expand tax credit benefits to foreign companies investing in their own country.

Above all, high-end jobs are created. The industry expects to create 5,000 to 7,000 jobs through one semiconductor factory. It is estimated that there will be 2~3 times, up to 20,000 jobs, including indirect sectors such as utilities, equipment, and safety.

Bloomberg reported that Samsung Electronics plans to produce semiconductor chips of 3 nm or less (nanometer·1 nm = 1 billionth of a meter) in the new line at the Austin plant. Whether it’s Austin, Arizona or New York, if Samsung builds a semiconductor plant in the US, it’s likely to introduce the latest processes.

Pat Gelsinger, Intel’s new CEO, said in a recent earnings release that “Intel will keep most of its manufacturing in its own plant while using more external facilities than it is today.” Here, Samsung Electronics and TSMC are cited as’external facilities’. Only two companies around the world can produce chips of 10 nm or less.

TSMC has already announced that it will invest up to $28 billion (approximately 31 trillion won) by 2030, including the foundry of the 5nm process ($12 billion) being built in Arizona. So, experts pay attention to the ‘3nm process’. When the nanoprocessing is advanced, that is, the circuit line width is reduced, the degree of integration increases and low power and low heat generation become possible.

Lee Jong-hwan, professor of system semiconductor engineering at Sangmyung University, interpreted it as “a signal to become the world’s best in the foundry field,” saying, “This means that we will secure process technology that goes beyond TSMC.” According to Trend Force, a market research firm, Samsung Electronics’ foundry share as of the end of last year was 17%, less than TSMC (54%).

Instead, the scale of investment increases. An official of Samsung Electronics predicted that “30 trillion won will be needed if the latest process is 3nm or 5nm full size.” 10 trillion won is spent on securing land and buildings, water, electricity, gas facilities, and clean room construction. Dozens of equipment worth hundreds of billions of dollars per unit have to be brought in here. Han Tae-hee, professor of system semiconductor engineering at Sungkyunkwan University, said, “In fact, 11 trillion won is not a big sum for semiconductor processes below 5 nm. In fact, it will cost more than this.” Another Samsung official also said, “If new parts and equipment are applied, it will cost at least 30 trillion won.”

Samsung Electronics has a decisive weakness in the foundry industry. The nickname’the most powerful copycat in the world’ is a burden. It is also said to be the only company in the world to design and manufacture almost all semiconductors and devices. For Intel, it means that it could be’the feeling of leaving a fish warehouse to a cat.’ It contrasts with TSMC’s motto,’Do not compete with customers’.

However, driving it to TSMC may cause problems in price negotiations or supply. Jeong-hoon Jeon, a professor of semiconductor system engineering at Sungkyunkwan University, diagnosed, “Samsung Electronics and Intel needed to pursue long-term cooperation with each other. In this situation, Samsung Electronics’ expansion of a semiconductor factory in the US is an appropriate option.”

Samsung Electronics moved its production bases for major products such as mobile phones, home appliances, and IT to Vietnam and China. It can be considered as 90% of the product produced. However, the proportion of semiconductor production in Korea is over 80%. So, some point out whether the so-called’Korea Exodus’ is starting. “No,” said Park Jae-geun, a professor at Hanyang University’s Department of Convergence Electronic Engineering. “Semiconductor companies are sensitive to customers. Now I see the market and invest.” Ahn Ki-hyun, executive director of the Korea Semiconductor Industry Association, also said, “It should be understood as a strategy that Samsung Electronics and TSMC are in charge of global demand.”

However, a business official who requested anonymity warned, “If we realize the’economy of scale’, which has been regarded as the weakness of the Austin plant so far, Korea Exodus may become a reality in the mid to long term.”

Reporters Lee Sang-jae and Moon Hee-cheol [email protected]