Astronomical Investment
Astronomical investment plans in the form of a combination of the public and private sectors are being announced one after another with the goal being to achieve semiconductor supremacy. This is nothing short of a reorganization of the world semiconductor industry. Right now, alliances aim to hold a specific country or countries in check, but behind the scenes countries are placing top priority in protecting or expanding their own interests, raising a forecast that an unprecedented game of chicken will emerge in the world semiconductor market three years later.
According to the industry on March 22, global semiconductor giants laid out plans to invest in the semiconductor industries in Korea, the United States, the European Union (EU), and Japan, and their total investments came close to 1,400 trillion won (US$1.094 trillion).
Samsung Electronics recently announced that it will invest 300 trillion won (US$234 billion) in building five high-tech semiconductor fabs in Yongin, Gyeonggi Province in Korea. The company is also proceeding with the construction of three fabs -- P4, P5 and P6 -- in Pyeongtaek, Gyeonggi Province. In addition, it announced in 2022 that it would invest US$192.1 billion (252 trillion won) to build 11 fabs in Texas of the United States by 2034.
Intel, a leading American semiconductor company, plans to pour up to US$210 billion (274 trillion won) into its global investment in semiconductors. It announced a plan for expansion of up to US$100 billion in Ohio of the United States and will invest US$80 billion in Europe to significantly expand production facilities.
As for investment funds to be spent on chips by countries, there will be an investment of 567 trillion won (US$443 billion) in Korea, 618 trillion won (US$483 billion) in the United States, 127 trillion won (US$99.2 billion) in the EU, and 60 trillion won (US$47 billion) in Japan over the next 20 years. Their combined amount is 1.7 times the size of the global semiconductor market of US$613.5 billion (approximately 802 trillion won) in 2022 estimated by the Organization World Semiconductor Trade Statistics (WSTS).
Semiconductor industry insiders are concerned that excessive investment competition could lead to the collapse of the semiconductor market. This is because profits may deteriorate in earnest when investments are completed in a few years and a glut in supply begins. In the process of internalizing a supply chain by each country, global alliances such as Chip 4 (Korea, the United States, Japan and Taiwan) may also shrink. Kim Yong-seok, a professor at Sungkyunkwan University, expressed concern, saying, “Since countries around the world have been announcing that they will build local semiconductor factories, there is a good chance that it will become a problem in terms of supply and demand over the next few years.”