Samsung increases upstream investment and builds chip supply chain

Nikkei reported that Samsung Electronics has invested heavily in a group of medium-sized companies in an effort to build a chip supply chain network consisting of equipment factories and raw material suppliers in South Korea, trying to reduce its overseas exposure amid the Japan-South Korea trade conflict and the US-China trade tussle.

Samsung and its portfolio companies have invested a total of $238 million in nine companies since last summer, according to data from the Korea Exchange, all of which are mid-sized companies that excel in specific areas.

Samsung's investment scope covers semiconductor chemical raw materials, wafer polishing system development, mask protection materials, etching materials, etc., mainly targeting areas where Japanese companies have gained a huge market share, as well as companies that develop cutting-edge materials.

Nikkei reported that Samsung's investment in suppliers was minimal before July 2020. In July 2019, Japan restricted exports of some chip manufacturing materials to South Korea, making South Korean companies aware of the risks of relying on Japan. South Korean President Moon Jae-in has therefore been committed to promoting local production of chip materials, parts and equipment, and has allocated 1.68 trillion won in the 2022 budget announced last month to promote the development of the semiconductor industry, an increase of 9% from 2011.