The Half trillion dollar project
Introduction
In an investment that is the largest of its kind, South Korea announced its investment of nearly half a trillion dollars (about 470 billion dollars) to establish a complete cluster for manufacturing electronic chips! With this huge project, South Korea aiming to create an empire related to this industry, by building 13 new factories and 3 research laboratories, to complement the 19 existing factories and two research laboratories. The construction of the two research laboratories and three factories is scheduled to be completed by 2027, while the time limit for the entire project has reached 2047.
What are Korea's motives behind this announcement?What are the Korean capabilities that enable it to complete such a huge project?
The technology sector is one of the most important drivers of the South Korean economy, and this country is considered as a home to major manufacturers of electronics as well as for the semiconductors. In 2022, Korea exported about $129 billion in semiconductor products, equivalent to 19 percent of its national exports. Korea relies on this commodity for exports and local manufacturing as well, whether in cars, electronic devices, smartphones...etc.
Through this project, South Korea aims to raise self-sufficiency in semiconductors from 30 percent to 50 percent by 2030. The production capacity of this cluster is supposed to reach about 7.1 million chips per month, i.e. the largest in the world. It is also expected that this project will create Between 3 to 3.5 million jobs.
In addition, the Korean government decided to encourage domestic investment in this industry in response to global changes in it. It issued a promise in which it stressed its continued support for this industry, extending the tax exemptions that were scheduled to expire this year indefinitely, and increasing these exemptions to reach 15 percent for large companies investing in factories, and 25 percent for small and medium-sized companies.The success of this huge project is supported by many factors. This industry is backed by decades of experience in South Korea, which is what distinguishes it most from China in this field, as well as by huge companies such as “Samsung” and “EK Hynix”, which have a clear desire to invest in this project.
These huge investments are driven by expectations of a rise in global demand for semiconductors, whose sales in 2022 was about $600 billion, and are expected to reach $630 billion this year, and more than a trillion dollars in 2030. Especially in light of the growth of data centers, storage, and artificial intelligence applications, that will contribute in increasing of the demand to electronic chip leading to an expected increase in sales from 100 billion in 2022, to about 250 billion in 2030.
Conclusion
South Korea's huge investment in electronic chips is for economic and strategic goals, as its local industries depend on it, and this industry is the most important pillar of their economy.
South Korea has become a global house of expertise in this industry, and has created an integrated system in which millions of Koreans with high qualifications and rare experience work.
It is clear from the global trend that the importance of these chips is constantly increasing, and their strategic importance as an essential element in artificial intelligence will only increases its strength.
Therefore, the government announcement of this huge investment, with all the legislative, financial and political support, is justified and understandable…As this industry is the future of the world that Korea seeks to be at the heart of.
*Image designed on Canva
Posted Using InLeo Alpha
That's a huge investment but it's indeed a boost for its economy. The local industries must be happy with their government support and a tax exemption would surely encourage more to invest in support of the undertaking.
the world is turning into digital and with the AI and other machines the semiconductors industry has a very promising future. so here South Korea are thinking really really big.