In just 10 years, South Korea has built a major chip town

At first glance, the large-scale Samsung semiconductor manufacturing plant seems out of place in Pyeongtaek. Not long ago, it was also famous for its open pastures and barracks that can accommodate thousands of US troops.
But this port city, located 50 kilometers south of the South Korean capital, has transformed into a high-tech center in the past decade.

A 65-year-old taxi driver said: “10 years ago, this was a pasture that smelled of manure.” “I didn’t expect that they would build such a huge building in this place.”
Under construction is the third of the six chip manufacturing complexes. The completed building is 83 meters high and 500 meters wide, highlighted by a three-color block pattern.
With the influx of a large number of workers, the project triggered an unprecedented real estate boom.

The taxi driver said: “The apartment buildings are built one by one, and my customers are getting more and more.”
Pyeongtaek was once known primarily as a military town, and Camp Humphreys was a US Army base built in 1951 during the Korean War. The United States and South Korea agreed in 2004 to relocate U.S. military personnel stationed in Seoul and surrounding areas to Camp Humphreys.
In return for cooperating with the relocation plan, Pyeongtaek received generous reconstruction funds from the national government. This provided funds for an 8.16 trillion won (7.2 billion US dollars) urban development project, which was launched in 2006.
The plan calls for 59,000 families to move into an area of ​​13.42 million square meters, a total of 144,000 people. There will be 13 new primary schools serving residents.
The project has been completed about 60%. A local real estate agent stated that apartment prices “have more than doubled since they started selling three years ago.”
The cornerstone of the reconstruction project is to recruit Samsung to build a new chip factory. These facilities will be built on an area of ​​2.9 million square meters, four times the space occupied by Kioxia’s largest semiconductor complex in Yokkaichi, Japan.
The plan initially awarded Samsung a plot of land at the northern end of the reconstruction project. But the location is about 2 kilometers away from the U.S. Air Force base.
Samsung finally asked to settle down at the southern end of the air base more than 5 kilometers away. The slightest vibration produced during take-off or landing of an airplane will reduce the output of chips.
Construction of the third building was announced in May and will contain a clean room that can accommodate 25 football fields. Nearby is a substation operated by Korea Electric Power. Roads and private waterways serve the complex.
The supplier has established its own location nearby. Chip manufacturing equipment manufacturers such as the Dutch company ASML and American Applied Materials have established various “front-line bases.” In short, hundreds of companies regularly visit the Pyeongtaek campus.
According to Pyeongtaek’s estimates, each Samsung chip manufacturing plant will create 20,000 jobs. More than 1,000 people have moved to this city, and the population has increased by 30% in ten years to 540,000.
By the time the reconstruction project is completed, the population is expected to double.
“The introduction of Samsung will greatly increase tax revenue,” a city official said.
The Korean economy is highly dependent on exports. Semiconductors account for one-fifth of all exports, making them among the best in all other categories.
Since semiconductors are the biggest economic driver, the government has been generous to provide support. During his visit to Pyeongtaek in May, President Moon Jae-in announced a US$451 billion plan to turn the country into a “semiconductor power”.
Wen’s plan includes tax relief for semiconductor capital investment and research, as well as a new low-interest loan program of more than 1 trillion won and government assistance to ensure electricity and water supply.
More national universities will also open majors in related fields, with the goal of cultivating 36,000 semiconductor experts in the next 10 years.
“Competition among semiconductor companies has now begun to attract countries,” Moon Jae-in said.
“My government will also work with companies as a team to enable South Korea to maintain its status as a semiconductor powerhouse,” he said.
Pyeongtaek is Samsung’s third largest chip manufacturing center in South Korea, after Giheung and Hwaseong. The world’s largest supplier plans to spend most of its annual capital investment of more than 25 billion U.S. dollars in Pyeongtaek to increase the production capacity of memory chips.
Samsung is particularly interested in establishing mass production capabilities for cutting-edge semiconductors. In this area, Samsung faces fierce competition from TSMC.
Chip manufacturers usually integrate production into a few centers because of the small size, light weight, and low transportation costs of semiconductors. Samsung decided to concentrate its resources in Pyeongtaek, because there has been almost no earthquake in the Greater Seoul area and there is sufficient water supply. The Giheung and Hwaseong hubs are less than 30 kilometers away from the hotel, making it easier for technicians to move between facilities.
Semiconductors power everything from smartphones to automobiles and weapon systems. It is now an industry worth more than US$400 billion and has a major impact on foreign policy and national security. This is the fuse of the competition between China and the United States. Other countries are also eager to increase production, and Japan is striving for TSMC to set up factories there.
Samsung positions the Hwaseong factory as its research and development command center and its Pyeongtaek factory as its cutting-edge chip manufacturing center. It also has factories in Xi’an and Austin, and has invested in China and the United States in an attempt to resolve the widening gap between the two countries.
At the same time, at home, Samsung has been busy showing good wishes to the Moon Jae-in government.
When Moon Jae-in announced his plans for the semiconductor industry, Samsung announced 38 trillion won in new investments, including the new wing of the Pyeongtaek factory. About a week later, shortly before Moon Jae-in met US President Joe Biden, it announced that it would spend $17 billion to build a new American factory at an event in Washington.
Both of these announcements provided a major political impetus for Moon Jae-in at a critical moment.
Biden told reporters after the summit: “I am particularly pleased that so many leading Korean companies have seen the benefits of investing in the United States.”
He asked Samsung Vice Chairman Kim Ki-nam and other South Korean executives to stand up and applaud, adding that their investment “will help consolidate and protect the supply chain of products such as semiconductors.”
South Korean conglomerates often announce plans for large investments and job creation while the president is visiting abroad, and are likely to be urged to do so in order to build goodwill towards the US summit.Samsung, Hyundai Motor, SK Group, and LG Group jointly announced an investment of 44 trillion won in the U.S.
But statistics include projects that are already in progress, were on the table long before the summit, or were still in the early stages of planning. For example, Samsung has not even decided on the location of its proposed US factory.
Most importantly, these investments represent the nunchaku, an art of reading room that is vital in Korean society.
Meeting the government’s expectations is particularly important for Samsung. Samsung’s vice chairman and actual person in charge, Lee Jae-yong, has been in jail for bribing former President Park Geun-hye since January.
Now, five months after Lee was sentenced, people are beginning to talk about possible pardons—a power reserved exclusively for the president. Those seeking lenient treatment with the vice chairman, including Samsung itself, are weighing Seoul’s sentiment, especially Moon Jae-in’s progress.
The commercial lobby has issued a joint statement to the President’s Blue House, requesting the pardon of Lee. A poll conducted by Hankook Research last month showed that 64% of respondents supported the pardon.
This pressure seems to make Wen difficult to deal with easily.
The South Korean president had previously rejected any idea that he would pardon Samsung’s descendants. But recently his tone has changed significantly.
Moon Jae-in told business leaders at a luncheon on June 2 that “many public sympathizes” to pardon Lee.
“I will listen carefully to people’s opinions and make decisions,” Moon Jae-in said at a press conference last month.

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