South Korea to surpass China in chip machine spending in 2024
Now Reading
South Korea to surpass China in chip machine spending next year

South Korea to surpass China in chip machine spending next year

Chip foundries are particularly important in the race for economic and political dominance

Avatar
South Korea

South Korea is forecast to overtake China in spending on advanced chipmaking equipment next year in a sign of US export controls reshaping global supply chains for semiconductors.

Korea will likely increase its investment in fab equipment by 41.5 per cent to $21bn in 2024 while China logs only a 2 per cent increase to $16.6bn, according to data from SEMI, a global semiconductor association based in the US.

The shift underscores China’s struggle to secure crucial machines to improve its chips as US curbs make it harder to access equipment purchased from a handful of makers like ASML Holding NV of the Netherlands.

As the Dutch and Japanese governments join restrictions imposed by the US on exports to China, the most advanced chips and equipment from the likes of Nvidia and Tokyo Electron are being kept out of Chinese hands.

US chipmaking equipment suppliers including Applied Materials, Lam Research and KLA are expected to lose billions in sales this year due to the US restrictions on China.

Chip foundries are particularly important in the race for economic and political dominance as they produce cutting-edge chips needed for artificial intelligence, self-driving vehicles and other technologies essential to boosting national competitiveness.

OpenAI’s ChatGPT, for instance, was produced by putting together tens of thousands of Nvidia’s A100 chips — which are banned for sale in China — into a functional supercomputer.

With a large share of its memory chips produced in China and growing awareness of US unease, South Korea is now looking to its own soil to lay the ground for foundries as it sees contract chipmaking among its biggest growth engines for the economy.

President Yoon Suk Yeol earlier this month announced a plan to invest in a chipmaking cluster south of Seoul drawing KRW300tn ($230bn) from Samsung Electronics over the next two decades. Samsung is also building a semiconductor plant in Texas to win more foundry business, particularly in the US.

Read: Samsung drives $400bn South Korea plan to propel key tech

Taiwan, home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing is expected to retain its global lead in fab equipment spending with $24.9bn in 2024, a 4.2 per cent increase from this year, SEMI said separately in its quarterly global forecast.

Fab equipment spending in Japan is expected rise to $7bn in 2024, SEMI said. Japan recently ended its export curbs to South Korea after the leaders of the two US allies held a summit in Tokyo to restore diplomatic ties and tech supply chains.

Overall, global fab equipment spending is expected to increase 21 per cent to $92bn in 2024 after it decreases 22 per cent this year on weaker chip demand and higher inventories, SEMI said.

You might also like


© 2021 MOTIVATE MEDIA GROUP. ALL RIGHTS RESERVED.

Scroll To Top