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🇰🇷 South Korea /Economy & Trade

Samsung, SK Hynix Eye Honam for Semiconductor Packaging Plants Amid Supply Chain Strategy

From Hankyoreh · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

News Named sources New plan
  • Samsung Electronics and SK Hynix are expected to officially announce plans to build semiconductor plants in the Honam region as early as the end of this month.
  • The strategy involves establishing semiconductor fabrication plants (fabs) in the Seoul metropolitan area and packaging facilities in Honam, aligning with the government's regional development policies and aiming to stabilize the supply chain.
  • Key challenges include attracting and retaining research and development and production personnel in the Honam region, while the global packaging market is projected to grow significantly, driven by AI chip demand.

Samsung Electronics and SK Hynix are reportedly preparing to officially announce their strategy of "dual semiconductor plant" operations by the end of this month. This plan involves establishing fabrication plants, or fabs, in the Seoul metropolitan area and developing packaging facilities in the Honam region. This approach aims to comply with the government's regional development policies and enhance supply chain stability.

The packaging market size is projected to grow from $33.5 billion last year to $95.3 billion by 2035, at an average annual rate of 11%.

— Global Market InsightMarket research firm Global Market Insight's projection for the semiconductor packaging market.

The companies began considering regional investment plans early this year, following the development of a large-scale semiconductor cluster in Yongin. Instead of focusing on front-end processes like chip manufacturing, they are considering distributing packaging plants, which have fewer location constraints, to the Honam region. Packaging, once a simple assembly process, has become a critical technology for AI chips, determining success in the market. The global packaging market is expected to grow from $33.5 billion in 2023 to $95.3 billion by 2035, with an average annual growth rate of 11%.

While some point to increased logistics costs, the impact on the semiconductor industry is considered minimal.

— Industry insiderCommentary on the potential logistical challenges of distributing packaging facilities to the Honam region.

Industry insiders state that there are no technical difficulties in distributing packaging facilities to the Honam region, noting that TSMC also has multiple bases across Taiwan. While some point to increased logistics costs, the impact on the semiconductor industry is considered minimal. A significant challenge, however, remains attracting and retaining skilled labor. Relocating employees with established lives in the Seoul metropolitan area to the Honam region is anticipated to cause some friction.

The key is attracting talent. Some friction is expected in the process of relocating employees with living bases in the Seoul metropolitan area and its vicinity to the Honam region.

— Industry insiderRegarding the challenges of human resource acquisition for the new semiconductor facilities.
DistantNews Editorial

Originally published by Hankyoreh in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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