Samsung broke ground in Pyeongtaek south of Seoul on Thursday for a new semiconductor plant being built for a record W15.6 trillion investment (US$1,093).
The project marks the first big local facility investment after more than a decade’s exodus of domestic manufacturers as they built factories where labor is cheaper.
President Park Geun-hye, Minister of Trade, Industry and Energy Yoon Sang-jik, and Samsung vice chairman Lee Jae-yong were among 600 prominent figures at the event.
Samsung seeks to claim the No. 1 spot in the global semiconductor industry. Samsung is the world’s largest producer of memory chips, including DRAM and NAND flash chips, but ranks at No. 2 after Intel when it comes to system semiconductors such as CPUs and application processors.
According to market researcher IHS, Intel sold US$49.9 billion worth of semiconductors last year, while Samsung sold $38 billion. The new plant could change all that.
It will measure 2.89 sq.m and Samsung plans to begin running its first assembly line there in 2017. The new plant together with its existing factories in Giheung and Hwaseong, also south of Seoul, will form a microchip cluster in the area.
Semiconductors remain Samsung’s main breadwinner, generating more income than smartphones. Samsung earned W5 trillion in operating profit from semiconductor sales in the fourth quarter last year and the first quarter this year but made W3.8 trillion in operating profit from smartphones.
Korean businesses have mostly focused investment on China and Vietnam, where labor costs are cheaper, but Samsung’s decision could prompt other manufacturers to follow suit as subcontractors also set up production lines at the new complex, creating more jobs here.