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Samsung develops chip supply chain at homeland

According to Nikkei, Samsung Electronics is developing a network of chip materials and equipment suppliers in South Korea in an effort to protect itself from the effects of the Japan-Korea trade conflict and US-China tensions.

edt292 by edt292
08/09/2021
in Blog
Samsung phát triển chuỗi cung ứng chip trên sân nhà

Image: Nhi Pham

HIGHLIGHT

  • According to a report submitted to the Korea Exchange, Samsung has invested a total of 276.2 billion won (approximately $238 million) in nine mid-tier companies with strengths in specific areas since last summer.
  • One of the main reasons why Samsung has increased its investment is international disputes, clouding the company’s chip business prospects. 

FULL ARTICLE

Developing domestic supply network

According to a report submitted to the Korea Exchange, Samsung has invested a total of 276.2 billion won (approximately $238 million) in nine mid-tier companies with strengths in specific areas since last summer, which is in stark contrast to the relatively small amount that Samsung contributed capital to suppliers before July 2020.

Samsung currently holds just under 10% shares of each medium-sized enterprises, which mainly through a new share buyout. It is known that 8 out of 9 companies invested by Samsung have listed on the market. The funding round started with Soulbrain, a supplier of hydrogen fluoride used in chip production, with an amount of 24.9 billion won in July 2020. KCTech, the developer of the wafer polishing system, also received 20, 7 billion won in November 2020.

Samsung starts pouring capital with Soulbrain

In addition, Samsung also held shares in advanced materials handling companies when it heavily invested 43 billion won in Fine Semitech, a company that produces protective materials for photomasks in March this year. Along with that 21 billion won was poured into engraving materials company DNF last month.

Samsung’s goal is to develop the process of miniaturizing the chip production line, thereby creating products with high performance while still saving power consumption.

A Samsung semiconductor manufacturing center in Korea

Minimizing the risk of international disputes

One of the main reasons why Samsung has increased its investment is international disputes, clouding the company’s chip business prospects. With its chip-making operations in China, Samsung’s factories will have their supplies of materials and equipment cut off due to the long and direct confrontations between Beijing and Washington.

Samsung may be affected by direct and protracted confrontations between Beijing and Washington

In particular, Korean enterprises are clearly aware of the risk of dependence on Japan when Japan applied export restrictions on some chip production materials bound for Korea in July 2019.

Faced with this situation, South Korean President Moon Jae-in has promoted domestic production of chip materials, parts and equipment. In the government’s 2022 budget announcement last month, the Ministry of Trade, Industry and Energy spent 1,680 billion won on developing the chip industry, up 9% from last year.

Chip suppliers in Korea have also been expanding their production and business activities. Among the 14 suppliers selected by eBest Investment and Securities as particularly benefiting from the Seoul government’s domestic manufacturing policy, 13 enterprises reported 39% revenue growth in the first half of this year, higher than average 17% of all Korean companies.

Samsung is still going head-to-head with Taiwan Semiconductor Manufacturing Co (TSMC) in the area of advanced semiconductor manufacturing and there is no change in its plans to use advanced technology from Japan, America and Europe.

Samsung’s efforts to build a domestic supply chain won’t happen overnight, but the company’s sheer size could make its moves significant and will certainly impact international supply chains.

Minh Ngo

FURTHER READING:

Samsung Electronics to halt production at its last computer factory in China

Source: Thanh Niên
Tags: chip supply chainSamsung

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