Behind Samsung's re-acquisition of the top spot in chip revenue is the South Korean government's dream of becoming a strong country?

【Blue Technology Roundup】Don't just focus on Samsung's home appliance business, in fact, one of Samsung's most profitable businesses, chips, has not been affected by the epidemic, but its revenue has been further improved.

In the macro context of lack of cores, since last year, Amazon, Microsoft, Meta and other Internet companies have accelerated the construction of data centers, making Samsung's chips more and more tight, and the performance has risen.

In the field of chips, Samsung has leapt to the most powerful array in the world. Gartner data shows that Samsung's chip revenue in 2021 was $73.2 billion, up 28% in one year, and surpassed Intel for the first time since 2018 to jump to the top of the global rankings.

Behind this eye-catching chip achievement is Samsung's ambition for chips, as well as hundreds of billions of crazy investments, which is the South Korean government's desire for the position of global chip hegemony.

Samsung chip's 100 billion "Great Leap Forward"

In the chip field, Samsung is a latecomer.

In the 1970s, Samsung only established white electric production lines such as refrigerators, air conditioners, and washing machines, and the core electronic devices were basically subject to people and dependent on imports.

In order to get rid of this situation, Samsung once tried to learn technology from japan, the chip overlord at that time, but the answer was, "Money can be lent to you, but technology cannot be lent to you."

This gesture stung Samsung. In 1974, Samsung founder Lee Bingzhe bought Hankook, an American semiconductor company on the verge of bankruptcy, out of his own pocket, and then after three years of integration, he established Samsung Semiconductor.

Chip is a talent-intensive, capital-intensive industry, and a cavity of enthusiasm cannot bring about substantial change.

Samsung invested in the chip industry, the first 15 years have achieved nothing, until 1983 successfully launched the first 64-bit chip, but this chip once launched on the market means to be eliminated, because it has been 4 years behind Japan.

Even so, Samsung still hasn't given up on the technical iteration of the chip. For Samsung, only by mastering the core technology can it have a real foothold. Throughout the 1980s, Samsung Electronics lost money year after year, and all equity capital was in deficit, but for the semiconductor business, Samsung did not slacken off a little.

It was not until around 1990 that Samsung invested $500 million in 200nm wafers for 5 consecutive years, and finally became a leader in the global DRAM market. Today's brilliance of Samsung Semiconductor should be more grateful to Li Bingzhe's persistence that year.

Nowadays, Samsung has completely got rid of external dependence on chips, and the industry runs through the whole process link of chip design, manufacturing, packaging, testing, etc., and its revenue has ranked first in the global chip companies.

On chip manufacturing alone, Jibang Consulting data shows that in the third quarter of 2021, Samsung's chip foundry revenue has reached $4.81 billion, second only to the chip foundry's giant TSMC, which had a quarterly revenue of $14.8 billion.

Throughout the history of Samsung's chip development, if you use a word to describe it, it is "crazy money". Whether it is in the early days of entrepreneurship or now becoming an industry leader, this is Samsung's consistent practice.

In August 2021, Samsung announced to the outside world that it plans to invest $150 billion in chip manufacturing in the future, with the intention of pointing to the TSMC foundry throne before 2030.

In recent years, Samsung has continuously increased its chip investment and sung with TSMC. According to IC Insights, Samsung Semiconductor will invest about $30 billion in 2021 and will continue to increase in 2022, and will invest at least $32 billion (about 204.5 billion yuan).

In addition, Samsung has also invested more in the United States to build a $17 billion factory in Texas to manufacture cutting-edge logic chips.

This kind of crazy investment of hundreds of billions of dollars, regardless of cost, has become the base support for Samsung's increasing strength in the chip industry, and also highlights its ambitions in the chip industry.

And this ambition is actually a microcosm of the South Korean government's pursuit of a chip power.

South Korea's trillion ambitions

Needless to say, how important the chip is.

At present, the expansion of the chip industry is in full swing. As Kinam Kim, Samsung's vice chairman and head of device solutions, put it, "The entire semiconductor industry is facing a watershed, and now is the time to develop a long-term strategy and investment plan." ”

In the global market scope, not only China regards it as a strategic highland for future development, but also the United States, the European Union, and Japan have also released semiconductor strategies.

The U.S. plans to spend $52 billion to support research into semiconductor manufacturing, automotive, and computer critical components; the European Union aims to invest more than 45 billion euros to produce at least 20 percent of the world's cutting-edge chips by the end of the 2020s; and Japan plans to invest $47.9 billion to achieve what it calls the "Semiconductor Industry Radical CompactIon Package."

Behind Samsung's crazy investment, there is a hidden ambition of the South Korean government for the chip industry.

Combing through the measures frequently launched by the South Korean government, you will find out how eager the South Korean government is for chip power.

On May 13, 2021, the South Korean government issued a plan called "K-Semiconductor Strategy", starting from taxation, finance, talent training, legislation and other aspects, hoping to build a government-enterprise semiconductor industry chain cluster, covering semiconductor production, raw materials, components, equipment and design, with the goal of becoming the global chip industry hegemon by 2025.

At present, 153 semiconductor-related companies such as Samsung and SK Hynix are participating in this plan. According to the plan, the 153 semiconductor companies will spend $450 billion (about 510 trillion won) in the next decade to build South Korea's "strategic weapons."

In this plan, Samsung originally planned to invest $107.1 billion by 2030 to accelerate wafer foundry technology research and development and equipment investment, and now it has increased the funding to $137.7 billion. SK Hynix not only said it will first invest in the 8-inch (200mm) foundry business, but will also build four new fabs in this semiconductor cluster.

In addition to strategic planning, at the beginning of this year, the South Korean government also passed a "Semiconductor Special Law" to support the chip industry in terms of investment, research and development, and talent training. At present, the South Korean government has revised the tax law, according to the revised tax law, small and medium-sized enterprises that invest in the national strategic technology research and development of semiconductors, batteries, vaccines and other three major areas can enjoy up to 50% of the tax deduction of the investment amount, and large enterprises can deduct up to 30%-40%.

In addition, South Korea's Ministry of Industry, Trade and Industry will also cultivate semiconductor manpower as an important support for ensuring semiconductor power, and plans to train a total of 36,000 semiconductor industry talents in 10 years, including 14,400 academics, 7,000 professionals and 13,400 staff.

Nowadays, the capital investment in the chip industry is showing explosive growth. According to IC insights, global funding soared 36 percent in 2021 and will increase by 24 percent in 2022, a record high of $190.4 billion. More data said that in the next decade, 1.5 trillion US dollars will be invested in the chip industry.

In this round of capital investment, Samsung is the most radical of the global chip companies, and the South Korean government is the country that is most eager to become a chip power.