Chips are in short supply. Manufacturers are spending big to prevent a repeat

As the world grapples with a shortage of semiconductors, South Korea’s chipmakers are spending huge amounts of money to shore up their production in the decade ahead.

Samsung and SK Hynix on Thursday announced plans to expand their investments in semiconductors through 2030 by allocating tens billions of dollars of new money to the sector.

Samsung said that it will spend another 38 trillion Korean won ($34 billion) on production logic chips, the brains that power computers. That brings its total spend on the business to 171 trillion won ($151 billion) over the period, including commitments announced in 2019.

The chipmaker also announced that it has begun construction of a new production line in Pyeongtaek — one of the world’s largest hubs for semiconductor production — which it expects to complete in 2022.

SK Hynix, meanwhile, announced its own plans to boost chip production, adding that it is considering doubling its foundry capacity.

The announcement Thursday from co-CEO and Vice Chairman Park Jung-ho at a government event “demonstrated his strong will that SK Hynix will devote to stabilize the global semiconductor supply amid the global chip shortage,” the company said in a statement. It declined to confirm exactly how much money it is investing, since “there is no detailed investment plan for the time being.”

The two South Korean companies are world leaders in the production of memory chips, but the government has been pushing its manufacturers to invest in making more advanced chips. Samsung aims to become “the world leader in logic chips by 2030,” the company said in its statement Thursday.

“The expansion of the company’s foundry business will help fuel entire new industries built on next-generation technologies like AI, 5G and autonomous driving,” it added.

These investments come at a time when global chipmaking giants are racing to expand chip fabrication capacity to meet strong demand and avert a worldwide chip shortage which has hampered industries ranging from autos to video games. Several factors are driving the crunch, from the coronavirus pandemic to US government sanctions on Chinese technology companies and extreme weather.

Other major semiconductor companies are also investing heavily in the sector. In April, Taiwan Semiconductor Manufacturing Company (TSM), the world’s largest contract chipmaker, revealed plans to pour $100 billion into advanced chips over the next three years to keep up with rising demand. Just a week before that, Intel (INTC) unveiled a plan to invest $20 billion in two new US chipmaking facilities.

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