Korea vs Japan: Who will win when building a billion-dollar ‘precious components’ furnace?

Chip industry race accelerates with Japan

Tokyo Electron is Japan’s leading chip equipment manufacturer and also one of the world’s largest suppliers of semiconductor manufacturing equipment. According to information provided by Nikkei Asia, Tokyo Electron will invest about 22 billion yen ($167 million) to build a factory specializing in chip manufacturing equipment in northeastern Japan. The company predicts that demand in the semiconductor industry will continue to grow.

The new factory site will be located in Oshu, a city in Iwate Prefecture, Japan. Tokyo Electron Technology Solutions, an affiliated manufacturing company, has signed an agreement with the local Oshu authorities for this construction site.

This will be Tokyo Electron’s 7th production facility in Oshu. So, on average, the investment for the entire chip factory system of this Japanese company can reach billions of dollars. According to Sadao Sasaki, president of Tokyo Electron Technology Solutions, the previous sixth plant was put into operation in 2020 and is currently in full capacity.

The addition of a seventh production facility is expected to expand the company’s production capacity of chip-making devices by 50%. Construction is estimated to be completed in the fall of 2025. The new factory will be equipped with the most modern equipment and improvements, aiming to double its capacity compared to its original size.

The factory will have two floors, with a total area of ​​57,000 square meters. The first floor will be the logistics center to optimize the production line. The second floor is dedicated to making semiconductor chip fabrication machines.

For operation, the new factory will import components manufactured by external contractors, thereby shortening the manufacturing time.

Mr. Sasaki said that chip demand will increase further in fiscal year 2024, so further expansion of production is a matter of discussion. About 900 people will work in the new production facility, including employees from affiliated companies and about 450 additional hires.

Tokyo Electron has actively invested capital in factories in light of the expected strong and long-term growth of the semiconductor chip market. The company already has large production centers in Miyagi, Yamanashi and Kumamoto prefectures to prepare for the increase in production.

Previously, in June 2022, Tokyo Electron also announced a business plan with the goal of investing in chip production to stay ahead of the market.

Along with increasing capacity, the company is also focusing on developing next-generation production equipment to produce the most modern semiconductors. The company plans to spend at least 1 trillion yen (more than $7 billion) on research and development of state-of-the-art equipment over the five years to March 2027 – a 70 percent increase from the previous five-year period. .

Korea – Building the world’s largest chip factory

Not out of the chip industry race, last week, South Korea also announced that it will invest 230 billion USD to build a giant chip factory in the capital Seoul. It is expected that this will be the world’s largest semiconductor component manufacturing cluster with a system of high-tech equipment.

The consecutive billion-dollar investments of the two Asian tigers – Japan and South Korea have shown a “fierce” race in the chip and chip making equipment industry. This market has seen “strong” growth due to the popularity of high-speed 5G networks and IoT (Internet of Things) systems, a network of smart devices and advanced technology.

The Semiconductor Devices and Materials International (SEMI) estimates that a record $108.5 billion worth of chip-making equipment was sold last year. The market is expected to accelerate by 2024.

Refer to Nikkei Asia, Reuters