S.Korea to create largest semiconductor cluster: President office

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South Korea is set to create the world's largest semiconductor cluster which is projected to draw in $230 billion worth of investments in an effort to increase the country's competitiveness in the global economy, according to the South Korean presidential office.

The cluster is expected to start operating by 2042 in the Gyeonggi-do province near Seoul, the office said. The cluster will include five leading chip manufacturers and around 150 companies involved in the chip production process; adding that the cluster would cover the whole supply chain of semiconductors.

Read more: S. Korea: Chipmakers' US subsidies toughening conditions

"Advanced industries are main factors for growth, a tool to ensure security and a strategic asset, which is directly connected to jobs," President Yoon Suk-yeol said. He explained that the cluster would be part of the government plan to develop six key industries, including biotechnology and semiconductors. He estimated that the project will include $420 billion worth of investments by 2026.

The South Korean government also plans to attract $2.4 billion in investments by 2030 to create next-generation chips for artificial intelligence and advanced vehicles.

Read more: Japan to lift restrictions on microchip trade with S.Korea

Furthermore, the presidential office said that the government would boost up its deregulation efforts to assist companies in contributing to the project more actively and to speed up the process required for the construction of industrial facilities for semiconductors.

Read more: S. Korean firms required to share profits with US Gov. under CHIPS act

Back in early March, it was reported that South Korean tech firms who enrolled in the CHIPS and Science act funding designed to boost US science and technology innovation are alarmed by a clause that was unveiled this week by Washington's commerce department. 

Applicants who receive more than $150 million in direct funding from the $39 billion fund are required to share part of their profits with the US government. 

Former trade minister Yeo Han-koo said that the clause about profit-sharing was "problematic" and that it was an "unprecedented move charting a new territory that we haven’t seen in recent years."

"Many companies may cry out on this. It may set a worrisome precedent for other countries who may follow suit," he was quoted saying by the news agency. 

The condition on profit-sharing was announced on Tuesday by the commerce department. Companies that report profits above original projections are required " to share with the U.S. government a portion of any cash flows or returns that exceed the applicant’s projections by an agreed-upon threshold," the department said.

The report states that the condition has been introduced as part of a safeguard program to ensure that the fund is not abused.

Samsung is reportedly building a $17bn foundry in Texas, while SK Hynix is planning to build a chip packaging plant in the US.