Samsung, SK’s U.S. investments may push back Korean construction schedules

Korean chipmakers are mulling when to resume the construction of domestic semiconductor plants after promising to funnel tens of billions of dollars into operations in the United States in response to the Biden administration’s substantial incentive package.

Deploying the vast sum pledged to both Korea and the United States will not be an easy task for chipmakers after last year’s cyclical downturn — despite the recent rebound in chip business.

The unexpected AI boom will make finding the right timing to execute investment and proceed with construction ever more challenging.

Samsung Electronics recently ramped up its investment in its Taylor, Texas facilities to $44 billion from the $17 billion package it had announced in 2021, per reports. That additional sum is expected to fund not only additional manufacturing plants, but also those for R&D and packaging.

The additional commitment will likely lead to a grant of $6 billion for Samsung Electronics under the Biden administration’s initiatives to bring advanced chip manufacturing capacity to American soil.

SK hynix also recently announced a $3.9 billion investment in West Lafayette, Indiana for high bandwidth memory (HBM) chip manufacturing facilities. The investment, however, is likely to increase should the Korean memory chipmaker commence subsidy talks with the U.S. government, as was the case for Samsung and TSMC.

The latest U.S. pledge is likely to alter the existing construction schedule for domestic plants.

Samsung Electronics “is reorganizing its investment plan from last year,” said one source with knowledge of the matter.

“Speed control should be inevitable.”

The two Korean chipmakers have also pledged sizable investment plan in Korea as well.

Samsung Electronics and SK hynix are involved in the government-led chip cluster project planned in Yongin, Gyeonggi that is slated for 2027 operation. Samsung pledged 360 trillion won to the project and SK hynix 120 trillion won.

The two firms also sit on a combined 45 trillion won worth of memory chip inventory following one of the industry’s worst cyclical downturns last year.

“The chip industry is often called an art of timing because when to invest is so important with the industry upturn and downturn continuously repeating,” said one source from the chip business.

“Tens of trillions of won are at stake for that one investment decision, so companies don’t have to strictly follow the preset schedule.”

Samsung Electronics, early this year, suspended work on its P5 line at its Pyeongtaek, Gyeonggi campus, drawing speculation that it was overhauling facilities and equipment in a pivot to AI processors.

Construction of SK hynix’s M15X chip plant in Cheongju, North Chungcheong, slated for 2025 operation, has also been indefinitely delayed. In 2022, the Korean chipmaker had pledged 15 trillion won for the plant throughout the next five years.

“From the next-generation HBM chips, design layout is expected to change significantly, which will lead to change in how these chips are manufactured,” said Kim Jung-ho, electrical engineering professor at KAIST.

“There will be more variables to facilities investment, and chipmakers will have a lot on their minds.”

BY LEE HEE-KWON, JIN EUN-SOO [jin.eunsoo@joongang.co.kr]