In an initiative that comes against the backdrop of the recent rapid improvement in bilateral relations between Japan and South Korea, Samsung Electronics of South Korea plans to establish a centralized R & D facility in Japan, and is also likely to build a Test line for semiconductor packaging.

Edited by |Alexander Yaxina

Economic section -  CJ journalist

Seoul - May,15,2023

 Korean tech giant’s planned investments in Japan coincide with rising tech war tensions and a thaw in bilateral relations

According to Japanese and Korean press reports, the world’s top producer of memory chips and second-ranking integrated circuit (IC) foundry plans to unify its R&D effort at its Yokohama Research Institute under the name Device Solution Research Japan (DSRJ). Samsung Electronics previously maintained half a dozen research facilities in Japan.

As reported by Pulse, DSRJ will hire Japanese as well as Korean researchers, an arrangement that should facilitate more interchange with Japanese suppliers and customers.

Pulse quoted an unidentified Korean business official as saying, “In the past, there was a perception that we have nothing more to learn from Japan, but Japan is still at the forefront of advanced technology. Samsung Electronics’ new integrated R&D center in Japan may signal the company’s intention to restore its link with Japan.”

That is – or was – a popular sentiment in South Korea that had lots to do with historical resentment, but very little to do with commercial reality. Samsung and SK Hynix, South Korea’s other large semiconductor maker, have long depended on Japanese equipment and materials suppliers – and vice versa.

Over the past five years, Tokyo Electron – Japan’s largest and the world’s third-biggest supplier of semiconductor production equipment – has made nearly 20% of its sales in South Korea.

Japanese makers of photoresists and other chemicals used in the semiconductor manufacturing process – products in which they have dominant global market shares – also have substantial business in South Korea.

 This became a political issue in 2019, when the South Korean Supreme Court ruled that Japanese companies must compensate Koreans forced to work for them during World War II.

Japan responded with export restrictions, causing massive inconvenience and disruption for both Korean customers and Japanese suppliers. Those restrictions were lifted in March of this year on the occasion of South Korean President Yoon Suk Yeol’s visit to Tokyo.

According to DigiTimes, “Samsung stated that this organizational restructuring [of R&D in Japan] has nothing to do with the improvement of governmental relations between South Korea and Japan.”

In other words, it was reportedly a business decision grounded firmly in the company’s assessment of market conditions and opportunities.

In addition, Samsung is reportedly planning to build a test line for the development of new semiconductor packaging technology in Yokohama at a cost estimated at more than 30 billion yen (US$220 million).

This is an area in which Japanese equipment and material makers are particularly strong. Taiwan’s TSMC, the world’s leading IC foundry, opened a 3D IC packaging R&D center in Japan’s Tsukuba Science City almost a year ago. More than 20 Japanese materials and equipment companies are working with TSMC in Tsukuba.

Construction of the packaging facility should start this year, according to press reports, with operation scheduled to begin in 2025. Several hundred people are likely to be employed. Like TSMC and US memory chip maker Micron before it, Samsung is expected to receive generous government subsidies to build semiconductor production facilities in Japan.

Samsung did not provide comments for the story but the amount of detail and the fact that it was front-page news in Japan suggests that there is something to it.

Last December, Samsung established an AVP (Advanced Package) Business Team within its Device Solutions Division. Working with its Japanese suppliers at a prototype development facility in Yokohama would be a logical next step.

If TSMC needs to be in Japan to get the most out of Japanese packaging technology, Samsung probably does as well. Samsung’s foundry business is still only one-third the size of TSMC’s.

This would be Samsung’s first semiconductor production facility in Japan and a major step forward in the collaboration between the two countries' semiconductor industries. Sony is a customer of Samsung Foundry but production is done in Korea. TSMC, Sony and Toyota Group components maker Denso are building a semiconductor factory in Kyushu, Japan.

South Korean President Yoon and Japanese Prime Minister Fumio Kishida are scheduled to meet during the G7 Summit in Hiroshima, scheduled to be held May 19-21. More information about Samsung’s investments and other economic collaborations between South Korea and Japan may be announced at the event.