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Samsung, Hyundai, SK, LG to invest $39.45 bil. in chip, battery sectors
By Kim Bo-eun
Korea's top conglomerates are set to play a larger role in the U.S. supply chain for key sectors including semiconductors and electric vehicles (EVs), after promising to invest around $40 billion to establish manufacturing plants and related infrastructure in the coming years.
This is an achievement for President Joseph Biden's administration which is seeking to secure critical high-tech supplies via building value chains on the continental U.S. as a means to contain China's growing influence. It is also a win-win situation for the Korean companies, as they get to play a substantial role in the supply chain for cutting-edge sectors, and subsequently acquire an increased market share. An upper hand in these industries is now considered par to military strength, as chips and electric batteries have become essential components in most, if not all devices used in the "digital era."
The pledged $39.45 billion in investments by Samsung, Hyundai, LG and SK came on the sidelines of the summit between President Moon Jae-in and his U.S. counterpart President Biden in Washington D.C., Friday.
SK Group Chairman and Korea Chamber of Commerce and Industry chief Chey Tae-won, Samsung Electronics Vice Chairman Kim Ki-nam, Hyundai Motor Group President Kong Young-woon and LG Energy Solution CEO Kim Jong-hyun were among the Korean businessmen present at a business roundtable at the U.S. Department of Commerce, also held in Washington.
Samsung Electronics is pouring $17 billion into building a new foundry plant in the U.S.; while Hyundai Motor said it would invest $7.4 billion into producing EVs, establishing charging infrastructure, and developing technology for future vehicles incorporating hydrogen, robotics and autonomous driving.
LG Energy Solution and SK Innovation are spending a combined $14 billion to build EV battery production plants of their own and also in the form of joint ventures with U.S. firms. SK hynix is investing $1 billion into setting up a large-scale R&D center focusing on artificial intelligence and NAND solutions in Silicon Valley.
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| President Moon Jae-in, third from right, speaks during a business roundtable with executives from Korea and the U.S., at the U.S. Department of Commerce in Washington D.C., Friday (local time). Yonhap |
For the U.S., setting up supply chains for crucial high-tech industries on its territory is a key imperative not only to compete with China but also to create jobs to boost its economy. On the Korean side, local firms will be able to secure critical roles in the value chains, and a subsequent share in the fast growing U.S. market for EVs, and a larger share in the global market for semiconductors.
"These new investments are going to create thousands of good paying jobs and jobs in the future right here in the United States," Biden said at a joint press conference with Moon following the summit. "And they are going to help fortify and secure the supply chains for things like semiconductors and electric batteries."
"The importance of cutting-edge technology sectors is growing as the transition to a digital era accelerates," Moon said. "We have agreed to work closely to establish a stable supply chain in cutting-edge manufacturing sectors, including semiconductors, EV batteries and medical supplies."
Calling for investment incentives
This is seen as a win-win for the U.S. and Korea because the former's technology and the latter's manufacturing power complement each other.
"The U.S.'s strengths in technology and Korea's strengths in applied technology and manufacturing is set to generate immense synergy," Kim Dae-jong, a professor of management at Sejong University said. "Korean companies will also be able to enjoy tariff and corporate tax benefits as they will be operating in the U.S.'s business-friendly environment and can see their exports grow."
Korean Minister of Trade, Industry and Energy Moon Sung-wook was quoted as stating that global firms from Korea and the U.S. strengthening their competitiveness in core industries through active investments and joint R&D will create synergy with their innovation and manufacturing capabilities.
Meanwhile, Korea called for incentives for further investments, including support for key materials for batteries. U.S. Secretary of Commerce Gina Raimondo pledged support in the meeting, referring to the Biden administration's $50 billion package for the chip sector.
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