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The author is an analyst of KB Securities. He can be reached at — Ed.

SEC has announced plans to invest KRW300tn (until 2024) in the building of the world’s largest foundry complex (system semiconductor) in Yongin with five state-of-the-art fabs. About KRW150tn will go to establishing production lines (e.g., materials, parts, equipment). The Korean government will also build a system chip complex. Upon completion, the Yongin complex’s addition to the Giheung/Hwaseong/Pyeongtaek complexes will form the world’s largest semiconductor production cluster.

Reasons for investment in Yongin

-SEC’s decision to build in Yongin seems to be based on the following:

  1. With Pyeongtaek running out of space, SEC requires a new complex to expand its foundry capacity in its bid to maintain market share against rival TSMC.
  2. With Yongin only 10-15 minutes away from SEC’s semiconductor R&D facilities in Giheung and Hwasung, synergies should be created.
  3. Yongin is the best choice in terms of avoiding geopolitical risk related to the U.S. and China.
  4. Yongin’s proximity within the Seoul Metropolitan Area will allow for easier business transactions with material/parts/equipment vendors and workforce retention.

Capex to result in sharper competitive edge for foundries, reinforcement of material/parts/ equipment supply chain.



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