According to a report from Korean media outlet Korea Economic Daily (KED), South Korean tech giant Samsung Electronics is looking to borrow up to KRW 5 trillion (approximately USD 3.6 billion) from the state-run Korea Development Bank (KDB) to finance its expansion of chip production facilities both in Korea and abroad.

According to sources cited in the same report, Samsung is in the final stages of negotiations with the KDB regarding the exact amount of the loan and the interest rates. Additionally, the report mentioned that Samsung’s competitor, SK Hynix, is also considering borrowing up to KRW 3 trillion from the KDB for its chip investments.

Regarding this, the bank is reportedly prepared to extend up to KRW 5 trillion to Samsung at an interest rate of about 3.5% per year. If finalized, this would be the first time in two decades that Samsung has borrowed such a large sum.

Notably, according to a previous report from the Chosun Daily, starting from July, the South Korean government will begin offering incentives and subsidies to semiconductor companies, launching a 26 trillion won (USD 19 billion) funding program to support the industry.

Initially, South Korea will start with an 18 trillion won (USD 12.94 billion) investment program, including preferential loans and investment funds. According to a statement from the Ministry of Economy and Finance, eligible companies will be able to borrow from a 17 trillion won low-interest loan program.

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• [News] South Korea Reportedly Unveils USD 19 Billion Semiconductor Subsidy to Boost R&D and Infrastructure Investment
• [News] South Korea Reportedly Pushes for KRW 10 Trillion Investment Plan to Strengthen Semiconductor Industry Position

(Photo credit: Samsung)

According to a report on May 29th from The Korea Economic Daily, it has speculated that AMD is likely to become a customer of Samsung Electronics’ 3nm GAA process. Reportedly, during AMD CEO Lisa Su’s appearance at the 2024 ITF World, which was hosted by the Belgian microelectronics research center imec, Lisa Su revealed that AMD plans to use the 3nm GAA process for mass-producing next-generation chips.

As per the same report, Lisa Su stated that 3nm GAA transistors can enhance efficiency and performance, with improvements in packaging and interconnect technology. This will make AMD products more cost-effective and power-efficient. The report further addresses that Samsung is currently the only chip manufacturer with commercialized 3nm GAA process technology.

Samsung announced in June, 2022, that it has started initial production of its 3 nm process node applying Gate-All-Around (GAA) transistor architecture. It claims that compared to 5nm process, the first-generation 3nm process can reduce power consumption by up to 45%, improve performance by 23% and reduce area by 16% compared to 5nm, while the second-generation 3nm process is to reduce power consumption by up to 50%, improve performance by 30% and reduce area by 35%.

An industry source cited by the report indicated that Su’s remarks could be interpreted as AMD planning to officially collaborate with Samsung on 3nm technology. Reports suggest that AMD is preparing to partner with Samsung, as TSMC’s 3nm production capacity has been fully booked by customers like Apple and Qualcomm.

The collaboration between the two companies could be traced back to April this year, as per a report from Korean media outlet viva100, Samsung was said to had signed a new USD 3 billion agreement with processor giant AMD to supply HBM3e 12-layer DRAM for use in the Instinct MI350 series AI chips. Reportedly, Samsung also agreed to purchase AMD GPUs in exchange for HBM products, although details regarding the specific products and quantities involved remain unclear.

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• [News] Samsung Reportedly Signs USD 3 Billion HBM3e Deal with AMD
• [News] AI Chip Alone Can’t Hold Up? AMD’s Fiscal Forecast This Quarter Reportedly Falls Short of Expectations

(Photo credit: AMD)

According to Bloomberg, mega economies like the US and the EU have invested tens of billions of dollars in the research and mass production of next-generation semiconductors, and notably, this is only the initial amount of funding already received.

Meanwhile, South Korea and Japan have also joined the “subsidy race” for chips. With substantial investments continuously pouring into the semiconductor industry, global chip competition will intensify.

• Korea to Allocate USD 19 Billion to Support Chip Industry

On May 23, Korea announced a comprehensive support plan for semiconductor industry, with an investment of up tp KRW 26 trillion (~ USD 19 billion). This plan intends to provide large-scale financing support and rev up investments in the construction of semiconductor parks and various infrastructures, and the cultivation of research and development personnel, involving companies include chip manufacturers, raw material suppliers, and chip design companies.

The core of this plan is a financing support project by the Korea Development Bank, valued at KRW 17 trillion (~USD 12.4 billion), specifically for semiconductor infrastructure investment. Additionally, Korea will extend tax concession for chip investment to ensure the smooth progress of semiconductor supercluster investment.

Semiconductor is a vital industry for Korea’s economic growth. In response to substantial subsidies for chip industry from the US and EU, Korea is actively promoting the development of its local chip industry.

In January 2024, Korea launched the “World’s Largest and Best Semiconductor Supercluster Construction Plan,” proposing an investment of KRW 622 trillion (~USD 454 billion) by 2047, which is to build 16 new plants, inclusive of R&D facilities, and construct “Semiconductor Supercluster”in semiconductor-intensive cities such as Pyeongtaek, Hwaseong, Yongin, Icheon, and Suwon in southern Gyeonggi Province. It’s estimated that the chip production capacity will reach 7.7 million wafers per month by 2030.

• Europe to Draw in EUR 100 Billion in 2030

Recently, an EU Commission official revealed that the “European Chips Act” is expected to help the European semiconductor industry attract more than EUR 100 billion (~USD 108 billion) in funding by 2030.

The official also stated that the EU Commission plans to complete reviewing the support plan of four advanced semiconductor pilot lines by September and is planning another pilot line for silicon photonics chip with an unspecified investment scale.

The “European Chips Act” officially came into effect in September 2023, aiming to increase the EU’s share of the global semiconductor market from the current 10% to at least 20% by 2030. The act promises to allocate EUR 43 billion (~USD 46.4 billion) in subsidy funds, with EUR 11 billion (~USD 11.8 billion) for the development of advanced process chip technology.

Industry sources indicate that Europe’s two largest chip projects are located in Germany. Germany plans to provide USD 20 billion in subsidies to increase chip production, of which around 75% will go to Intel and TSMC.

Intel is projected to invest over EUR 30 billion (~USD 33 billion) in building a wafer plant in Magdeburg, Germany, with an expected government subsidy of nearly  USD 11 billion. TSMC plans to build its first European factory in Germany, which will also receive government subsidies. Recent media reports indicate that efforts in establishing this factory is proceeding as planned, with construction expected to begin in the fourth quarter of 2024.

• Japan to Raise USD 25.3 Billion for Chip Sector

To enhance semiconductor R&D and production capabilities, Japan is also providing massive subsidies in the semiconductor field, including taking in foreign investment to build factories and strengthening local state-of-the-art process R&D and production.

It’s reported that since Japan formulated the “Semiconductor and Digital Industry Strategy” in June 2021, the Ministry of Economy, Trade, and Industry has raised approximately USD 25.3 billion for its chip industry, involving companies like TSMC and Rapidus.

In February, TSMC’s Kumamoto plant officially opened, marking TSMC’s first factory in Japan (Fab 23). The total production capacity will reach 40-50Kwpm  wafers per month, focusing on 22/28nm processes and a small part on 12/16nm, paving the way for the main process of the second Kumamoto plant.

In April, Japan approved a subsidy of up to USD 3.9 billion for Rapidus, a domestic semiconductor manufacturing company to mass-produce 2nm chips by 2027.

In addition to wafer foundries, Japan is also spotlighting memory industry. Previously, the Ministry of Economy, Trade, and Industry announced a subsidy of JPY 242.9 billion (~USD 1.546 billion) for Kioxia and Western Digital to build two advanced NAND flash memory chip production plants in Mie and Iwate Prefectures, attempting to meet the demands from AI and big data center markets. The joint venture plants will produce 218-layer 3D NAND chips.

• The US to Offer USD 29 Billion to TSMC, Samsung and Intel

The US “CHIPS and Science Act” was introduced in August 2022, providing USD 52.7 billion for chip research, development, manufacturing, and workforce development in the US, and offering a 25% investment tax credit for capital expenditures on manufacturing chips and related equipment.

It’s reported recently that since December 2023, the US has allocated about USD 29 billion in subsidies to companies such as Samsung, TSMC, Intel, and Micron. These chip manufacturers have pledged to invest approximately USD 300 billion in current and future chip manufacturing projects in the US.

In April, Micron, Samsung, and TSMC received US funding subsidies. Micron will establish two new chip manufacturing plants in upstate New York and Boise, Idaho (Its headquarter), with a fund of USD 6.14 billion. Samsung will build a plant covering leading logic, R&D, and advanced packaging in Taylor, Texas, and expand the production of mature process nodes in Austin, Texas, with a fund of USD 6.4 billion. TSMC is developing three cutting-edge wafer plants in Phoenix, Arizona, receiving USD 6.6 billion in subsidies.

Previously, Microchip Technology and Intel also secured USD 162 million and USD 8.5 billion in funding, respectively. Intel’s USD 8.5 billion is the largest single subsidy provided under the CHIPS Act to date, with which Intel will advance its commercial chip projects in Arizona, New Mexico, Ohio, and Oregon.

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• [News] South Korea Reportedly Unveils USD 19 Billion Semiconductor Subsidy to Boost R&D and Infrastructure Investment
• [News] US Allocates USD 39 Billion Subsidy to Semiconductor Industry for Establishing Plants

(Photo credit: Intel)

According to a report from CNA, the South Korean government has announced a comprehensive support plan for the semiconductor industry, amounting to KRW 26 trillion (roughly USD 19 billion). The plan includes substantial financial support, expansion of semiconductor parks, infrastructure development, and investment in R&D and talent cultivation, aimed at revitalizing the economy and improving livelihoods.

Reportedly, South Korean President Yoon Suk Yeol chaired the second economic review meeting, where this semiconductor industry support plan was unveiled. The centerpiece of the plan is a KRW 17 trillion financial support program provided by the Industrial Bank of Korea, designed to alleviate potential funding challenges that companies may face when constructing new factories, production lines, and equipment.

The tax reduction incentives, originally set to expire this year, is said to be extended, allowing semiconductor companies to partially offset their R&D and equipment investment costs against income taxes. Yoon stated that the Tax reduction incentives encourage companies to expand their investments, benefiting not only the companies themselves but also creating more quality job opportunities.

He emphasized that over 70% of the support will be directed towards small and medium-sized enterprises (SMEs), rather than just large corporations. Yoon further expressed that as the economy grows, tax cuts will actually generate more tax revenue.

Additionally, a KRW 1 trillion semiconductor ecosystem fund will be established to support smaller semiconductor SMEs with specialized technologies in wafer design, materials, components, and equipment, helping them to become world-class enterprises.

President Yoon also instructed to expedite the construction of semiconductor mega-parks and pledged cooperation with various government agencies to accelerate the resolution of infrastructure needs such as electricity, water, and external roads for the industry.

Particularly concerning the critical issue of power supply affecting yield rates, the government will intensify communication with the parliament to expedite the passage of a special law regarding grid use, which can significantly shorten the construction time for power transmission lines.

Investments in infrastructure are expected to exceed KRW 2.5 trillion, with the construction time for industrial parks projected to be reduced from 7 years to 3.5 years. Additionally, there is a plan to allocate KRW 5 trillion for manpower development from 2025 to 2027, a significant increase from the KRW 3 trillion allocated from 2022 to 2024.

President Yoon pointed out that the future success of the semiconductor industry hinges on system semiconductors, which account for two-thirds of the overall market.

Therefore, the government must collaborate with businesses to propose groundbreaking initiatives to enhance the competitiveness of system semiconductors, ensuring a dominant position in the international market. This comprehensive support plan is expected to be formally implemented shortly after finalization, potentially as early as mid-June.

As per a report from the Korean media outlet TheElec, a semiconductor fund initially planned at 300 billion won has been expanded to KRW 1.1 trillion. The original 7-year construction plan for the semiconductor cluster will be halved, according to South Korea’s Deputy Prime Minister Choi Sang-mok.

The remaining portion of the KRW 26 trillion investment will reportedly be dedicated to fostering researchers in the semiconductor field. South Korean chipmakers Samsung and SK Hynix welcomed the announcement, emphasizing the need for ongoing government support.

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• [News] South Korea Reportedly Plans to open AI Chip Center in San Jose
• [News] South Korea Reportedly Pushes for KRW 10 Trillion Investment Plan to Strengthen Semiconductor Industry Position

(Photo credit: Samsung)

According to a report from the Korean media outlet TheElec, South Korea is planning to establish an AI semiconductor innovation center in Silicon Valley.

The Korean Semiconductor Industry Association (KSIA) announced on Wednesday that it would accept applications until May 30th for those interested in residing at the planned center. A committee will review the applicants in June, with the move-in process beginning in August for those who are selected.

This initiative is part of the Ministry of Trade, Industry and Energy’s project to promote system semiconductor technology for export. Launched in April, the project aims to establish research platforms in the US and China. The ministry is collaborating with industry associations like KSIA for this endeavor.

A KSIA spokesperson informed TheElec that the center will provide independent offices for three to four companies and feature a large, open space for additional companies. The center will reportedly offer support for companies’ prototype testing, verification, and other assistance.

The South Korea government has been aggressively working on strengthening the country’s position in the semiconductor industry, as a series of ambitious projects have been announced recently, the AI Chip innovation center in the U.S. being its latest endeavor.

Earlier in May, the South Korean government is said to be planning to introduce a comprehensive chip investment and research support plan, surpassing KRW 10 trillion (roughly USD 7.3 billion) in scale, to enhance its position in the critical semiconductor industry, as per a report from the Economic Daily News.

Meanwhile, the report from South Korean media outlet BusinessKorea stated that on May 2nd, the South Korean Ministry of Trade, Industry, and Energy announced the “Second Strategic Planning and Investment Council,” comprising of representatives from research institutes, universities, etc, approved 62 new R&D projects for 2025, including flagship projects and roadmaps in over 11 domains.

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• [News] South Korea Reportedly Pushes for KRW 10 Trillion Investment Plan to Strengthen Semiconductor Industry Position
• [News] South Korea Reportedly Develops AI Chips for Autonomous Vehicles, Challenging NVIDIA

(Photo credit: iStock)