▲ A view of the construction site at the Yongin Semiconductor Cluster Industrial Complex in Yongin, Gyeonggi-do.
As Samsung and SK continue their 800 trillion won semiconductor investment project extending from the Seoul metropolitan and Chungcheong regions to the Honam region, the rapidly rising cost of constructing memory fabrication plants (fabs) has emerged as a significant variable.
With construction costs for a single fab surging from 60 trillion won in the past to 200 trillion won, astronomical amounts of capital will be required to secure future competitiveness.
According to industry sources on June 30, Samsung and SK plan to build a total of four memory fabs in the Honam region with a combined investment of 800 trillion won.
A simple calculation indicates that approximately 200 trillion won is required per memory semiconductor fab.
In its latest announcement, Samsung Electronics stated that it would invest 1.65 quadrillion won in Yongin and existing semiconductor complexes, separate from the 400 trillion won allocated for the Honam region.
Industry analysts estimate that Samsung Electronics will spend 1.2 quadrillion won to build six memory fabs in Namsa, Yongin, and approximately 450 trillion won to complete the P5 lines 1 and 2 at its Pyeongtaek campus.
The cost of building memory production facilities has risen sharply over the past one to two years.
In 2023, when Samsung Electronics and SK Hynix announced plans to create semiconductor clusters in Namsa and Wonsam, Yongin, they unveiled investment plans of 360 trillion won and 122 trillion won, respectively.
Considering that Samsung Electronics planned to build a total of six fabs and SK Hynix four, the investment cost per fab was estimated at 30 to 60 trillion won just three years ago.
However, following the announcement of this mega-project, Samsung Electronics has significantly upwardly adjusted its expected investment scale.
SK Hynix has also previously stated that its existing investment plans require revisions.
SK Group Chairman Chey Tae-won said in November last year, "We originally planned 128 trillion won in domestic investment by 2028, but the expected investment costs are continuously increasing." He added, "While an accurate estimate is difficult, investments in Yongin (semiconductor cluster) alone are expected to reach approximately 600 trillion won."
This explanation suggested an expected investment of 150 trillion won per memory semiconductor fab.
Industry insiders agree that the situation has changed further, and construction costs have risen even higher.
As the global surge in demand for artificial intelligence (AI) infrastructure makes expanding memory production capacity (CAPA) urgent, the cost of the required cutting-edge equipment has increased.
Coupled with inflation, investment costs have grown exponentially.
An industry official said, "Equipment investment costs have increased again in just a few months, so 150 trillion won per fab is now truly a minimum level." The official added, "It takes anywhere from two to three years to as long as five to six years to build a single fab, and considering the timeline for the completion of the Honam and Yongin investments, the cost per fab could exceed 200 trillion won by then."
This implies that the capital required for facility investment could snowball in the future.
Samsung and SK are focusing on securing the astronomical funds expected for facility investment.
SK Hynix has set out to raise capital through an American Depositary Receipt (ADR) listing.
The company is pushing to list and begin trading on the U.S. Nasdaq market on July 10.
Through this, its net cash is expected to exceed 100 trillion won within the second half of this year.
Samsung Electronics is also expected to expand its cash reserves based on unprecedented operating profits.
According to a consensus (earnings forecast) compiled by Yonhap Infomax from 17 securities firms that issued reports within the last month, Samsung Electronics' revenue for the second quarter of this year is projected at 174.1741 trillion won, with an operating profit of 84.785 trillion won.
The company is expected to achieve record-breaking annual performance, with projected revenue of 722.8121 trillion won and an operating profit of 373.4829 trillion won.
(Photo: Yonhap News)
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