Samsung and cross-town rival SK hynix have disclosed investment amounts for their chip divisions in 2022. Photo: AFP / Jung Yeon-je

SEOUL – South Korea’s chipmakers will be expanding their domestic investments this year to 56.7 trillion won (US$47.36 billion), according to a survey conducted by an industry body.

The figures were released by the Korea Semiconductor Industry Association based on a survey of its members on their investment plans for 2022. The stated amount represents a 10% increase over the 51.6 trillion won that the manufacturers invested last year, the Ministry of Trade, Industry and Energy said, according to Yonhap news agency.

South Korea is the leading global supplier of memory chips, which make up about 20% of national exports. The nation is home to semiconductor colossi Samsung Electronics and SK hynix, the two leading memory players.

Samsung is also the number two manufacturer of highly advanced logic chips, behind Taiwan-based TSMC, the world leader.

In an ever-digitizing world, semiconductors have, in recent years, become the most critical component in the global supply chain.

Strategically, they were wielded as a surgical weapon in Donald Trump’s trade assault on China and its leading tech company, Huawei. Commercially, they saw demand soar to unprecedented levels amid the work-at-home, play-at-home dynamic of the global Covid-19 pandemic.

Economically, chip companies reap massive revenues, but also need to make massive capital investments to maintain competitiveness.

South Korea benefits from a nose-to-tail ecosystem in the sector, from design to manufacturing to packaging to marketing. All this is densely packed into a 60-kilometer industrial corridor that stretches from a series of industrial towns south of Seoul to the Yellow Sea port of Pyeongtaek.

SK hynix is one of South Korea’s biggest chipmakers. Photo: WikiCommons

The country plans to increase the entrance quota at colleges with degrees in semiconductors to 700 this year, Yonhap reported, and to expand programs that will incubate 1,200 chip experts annually.

South Korea’s 10% increase in spending for 2022 is in line with investment increases in the sector worldwide.

In a quarterly forecast published in January, global chip-making organization SEMI found that chipmakers this year will raise their investments in fabrication equipment for chip plants by the same percentage – 10%. SEMI also found that South Korea will be the biggest investor in that gear, followed by Taiwan in second place and China in third.

This year will be the third consecutive year of investment growth, SEMI predicted.

While South Korea looks unassailable in the sector at present – in terms of the technologies deployed at its fabs, the amounts it is investing and the quality of its HR and infrastructure – an unusual shadow is hovering over the sector.

The traditionally non-unionized national flagship Samsung Electronics is suffering some industrial unrest during annual wage negotiations and faces the possibility of a strike, Reuters reported on Tuesday.

However, a union representative told the news agency that a strike, if it occurs, will not take place on the chip lines.

Unions must keep an eye on public opinion, and South Korea’s citizenry is sensitive to strikes at nationally important economic assets which tend to employ well-remunerated staff, but often feature long working hours and stressful conditions.

Samsung has never had a strike as it has customarily been non-unionized. Only in 2022 did de facto leader and Samsung heir Lee Jay-yong – now facing massive legal, political and public pressures over a series of scandals – permit unions to form.

Follow Andrew Salmon on Twitter: @Andrewcsalmon