South Korea's investment in advanced chipmaking equipment will grow bigger than China's by the next year, a new report said, underscoring the impact of the US 'chip war' on the market leader.
The United States has implemented a series of export controls on advanced chip technology, aiming to clamp down on China's advance in the key industry segment.
A Bloomberg report said South Korea's investment in the hot sector will go up by more than 40 percent to hit $21 billion in 2024. In the same period, China's investment will grow only about 2 percent to touch $16.6 billion. The data is based on calculations made by SEMI, which is a global semiconductor association based in the US.
The report says that China has been finding it difficult to get machinery to make advanced chips due to the trade restrictions it imposed on American companies. US allies like Japan and the Netherlands had also joined the US embargo on sale of chip technology to China, cutting Chinese companies off crucial supplies by Nvidia Corp., Applied Materials Inc., Lam Research Corp., KLA Corp. Tokyo Electron Ltd and ASML Holding NV.
Meanwhile, South Korea is ramping up its investment in chip technology. Samsung Electronics recently committed a whopping $230 billion (300 trillion won) over the next two decades on a chipmaking cluster near Seoul.
In October last year, the Biden administration tightened the screws on the Chinese chipmakers by enforcing more export controls targeting them. The move sought to stop not just American companies from selling key equipment and technology to China but persuade foreign firms to do so.
The new rules further restricted toolmakers like KLA Corp, Lam Research Corp and Applied Materials Inc from shipping any equipment Chinese-owned factories that make advanced logic chips.
In another landmark move in July, the US Senate voted to move forward with the CHIPS Act that will provide a $54 billion boost to the country's semiconductor industry. The long-delayed Senate vote fulfilled the chip industry's demand for subsidies that will enable it to compete with China.
Fab Equipment Spending
Another global giants that are spending big on Fab equipment are Taiwanese chip giant Taiwan Semiconductor Manufacturing Co. TSMC is spending $24.9 billion in 2024 on fab equipment, according to the SEMI data. In Japan too fab equipment spending is rising, and is set to increase to about $7 billion in 2024.