Samsung Group will invest 450 trillion won, about 356 billion USD, announced the South Korean conglomerate yesterday, 24th May. It would invest the money in the next five years to accelerate growth in biopharmaceuticals, semiconductors, and other next-gen technologies.
On Tuesday, Samsung Electronics also added that the investment through 2026 would help Samsung drive long-term growth in strategic areas like the chip industry. It also pledged aggressive investments in the biopharma industry to make it as successful as its semiconductor business.
One of the world’s prominent memory chipmakers, Samsung, has not provided any figures breakdown. However, it disclosed that 80% of the total investments would be made within South Korea, and the announcement includes a 240 trillion won investment pledge made in Aug 2021.
Samsung’s Strategic Sectors
At the same time, Samsung did not include EV batteries as a future growth engine in its announcement.
Samsung stated in the announcement that securing domestic chip and bio supply chains will be strategic and important for South Korea’s economic security.
The 450 trillion won investment, estimated to create 1.07 million jobs, is over 30% more than Samsung’s five-year investment.
The goal of Samsung with the investment is to secure the two weakest links in the chip supply chain, machinery, and talent. Besides securing at least a million jobs by 2026, the investment will also help South Korea purchase the most advanced machines from ASML.
These machines cost about 400 million USD, and Samsung aims to invest in them to create a 3-nanometer chip. In fact, reports suggest that Samsung is heading on with Intel, a US-based chip firm, to get to the market before the other.
These chips have applications in low-power, high-performance processors, high-resolution image sensors, and next-gen telecom.
Global Alliance in Semiconductor Industry
The pandemic has already forced countries to reassess their domestic production capabilities while securing supply chains for microchips. Samsung has already announced a massive investment in South Korea’s domestic chip sovereignty. As more investments come to domestic chip production, it could lead to a global semiconductor alliance by the end of the decade.
And an economic corporation with allies worldwide is among the robust ways to strengthen semiconductor supply chains.
The semiconductor industry is worth about 600 billion USD and could expand to a trillion by this decade. It makes heavy investments worthwhile for countries in new domestic manufacturing and other projects. For instance, the CHIPS for America Act aims to grant billions in subsidies to chipmakers for the R&D and production of chips in the US. At the same, India, the European Union, and China has similar plans to attract chipmakers to their markets.
However, the investments needed to build domestic supply chains in each of these countries would cost them at least 30 billion USD every year for decades. One country or company can’t sustain those levels. Hence, a global semiconductor alliance serves as an ultimate solution.