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Business News/ News / World/  South Korea to surpass China in chip machine spending next year
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South Korea to surpass China in chip machine spending next year

South Korea is forecast to overtake China in spending on advanced chipmaking equipment next year in a sign of US export controls reshaping global supply chains for semiconductors.

President Yoon Suk Yeol earlier this month announced a plan to invest in a chipmaking cluster south of Seoul drawing 300 trillion wonPremium
President Yoon Suk Yeol earlier this month announced a plan to invest in a chipmaking cluster south of Seoul drawing 300 trillion won

South Korea is forecast to overtake China in spending on advanced chipmaking equipment next year in a sign of US export controls reshaping global supply chains for semiconductors.

Korea will likely increase its investment in fab equipment by 41.5% to $21 billion in 2024 while China logs only a 2% increase to $16.6 billion, according to data from SEMI, a global semiconductor association based in the US.

The shift underscores China’s struggle to secure crucial machines to improve its chips as US curbs make it harder to access equipment purchased from a handful of makers like ASML Holding NV of the Netherlands. As the Dutch and Japanese governments join restrictions imposed by the US on exports to China, the most advanced chips and equipment from the likes of Nvidia Corp. and Tokyo Electron Ltd. are being kept out of Chinese hands.

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US chipmaking equipment suppliers including Applied Materials Inc., Lam Research Corp. and KLA Corp. are expected to lose billions in sales this year due to the US restrictions on China.

Chip foundries are particularly important in the race for economic and political dominance as they produce cutting-edge chips needed for artificial intelligence, self-driving vehicles and other technologies essential to boosting national competitiveness. OpenAI’s ChatGPT, for instance, was produced by putting together tens of thousands of Nvidia’s A100 chips — which are banned for sale in China — into a functional supercomputer.

With a large share of its memory chips produced in China and growing awareness of US unease, South Korea is now looking to its own soil to lay the ground for foundries as it sees contract chipmaking among its biggest growth engines for the economy.

President Yoon Suk Yeol earlier this month announced a plan to invest in a chipmaking cluster south of Seoul drawing 300 trillion won ($230 billion) from Samsung Electronics Co. over the next two decades. Samsung is also building a semiconductor plant in Texas to win more foundry business, particularly in the US.

Taiwan, home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co., is expected to retain its global lead in fab equipment spending with $24.9 billion in 2024, a 4.2% increase from this year, SEMI said separately in its quarterly global forecast.

Fab equipment spending in Japan is expected rise to $7 billion in 2024, SEMI said. Japan recently ended its export curbs to South Korea after the leaders of the two US allies held a summit in Tokyo to restore diplomatic ties and tech supply chains.

Overall, global fab equipment spending is expected to increase 21% to $92 billion in 2024 after it decreases 22% this year on weaker chip demand and higher inventories, SEMI said.

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This story has been published from a wire agency feed without modifications to the text.

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Published: 27 Mar 2023, 10:59 AM IST
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