[Deep & Wide] Samsung presents a job to Biden? “Review of investment of 18 trillion trillion US semiconductors”

The Wall Street Journal (WSJ) recently reported that Samsung Electronics is considering new and expanded semiconductor factories in the US. WSJ said on the 22nd, “Samsung Electronics is considering building a semiconductor production line in Texas, Arizona, and New York, spending 17 billion dollars (about 18 trillion won).” Bloomberg News reported on the day that “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).”

Samsung said, “The scale and timing of investment has not been decided”

Samsung Electronics responded cautiously, saying, “The size or timing of the investment has not been decided.” But inside and outside the company, “If you don’t invest now, you can be lost to competitors forever. There is an analysis saying that the possibility is high”. With the expansion of 5G mobile communication (5G), artificial intelligence (AI), autonomous driving, and cloud, the global semiconductor market is predicting a’super cycle’ (super boom). The possibility that Intel will partner with Samsung Electronics as a foundry partner has also increased.

Austin, the capital of Texas, has grown to the point of being called’Silicon Hills’ in the name of Silicon Valley, a symbol of information technology (IT). The Apple General Motors (GM) laboratory has arrived and Oracle has announced that it will be relocating its headquarters. There is no personal income tax or corporate tax in Texas, so the tax burden is low.

Lee Jong-ho, head of the Seoul National University Semiconductor Research Institute, said, “Samsung Electronics, which is the two largest mountain ranges of Foundry, has a North Korean risk, and TSMC in Taiwan has a trade conflict with the US. “For stable production, it is essential for the US to have a domestic production base.”

Increased tax benefits for Biden’s’US production’

US President Joe Biden, who was recently inaugurated, maintains the policy stance of the return (reshoring) policy of foreign companies that was promoted by his predecessor, President Donald Trump. His presidential pledge was’Made in All of America’. A bill has also been proposed to expand tax credits for foreign companies investing in the United States.

In the industry, 5,000 to 7,000 jobs are expected to be created through a single semiconductor factory. It is estimated that a maximum of 20,000 jobs will be created, 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. Pat Gelsinger, Intel’s new CEO, said in a recent earnings announcement that “Intel will keep most of its manufacturing in its own plant while using more external facilities than it is today.” Samsung Electronics and TSMC are cited as Intel’s’external facilities’. Only two companies around the world can produce chips of 10 nm or less.

Samsung, over 80% of semiconductor production in Korea… “There is no concern for Korea Exodus”

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. 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%).

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.”

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. However, the proportion of semiconductor production in Korea is over 80%. Some point out whether the so-called’Korea Exodus’ is starting. Professor Park Jae-geun of the Department of Convergence Electronic Engineering at Hanyang University said, “It is not so. “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, if negotiations with Intel break down, there is also a risk of’over-investment’. Professor Park said, “With the construction of a 10 trillion won foundry line in Pyeongtaek 2nd plant, how to make large-scale investments at the same time remains a task.”

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