US export controls are reshaping semiconductor supply chains, as South Korea is set to exceed China in spending on advanced chipmaking equipment in 2024.
According to US-based global semiconductor association SEMI's data, South Korea is projected to boost its fab equipment investment up to $21 billion in 2024, marking a 41.5 per cent rise.
Meanwhile, China is expected to increase only by 2 per cent to $16.6 billion.
China is facing difficulty in acquiring crucial machines to enhance its chip technology due to the restrictions imposed by the US on exports from a few makers like Netherland-based ASML Holding.
The Dutch and Japanese governments have joined the restrictions imposed by the US, making it even harder for China to access advanced chips and equipment from companies like Nvidia and Tokyo Electron.
US chip equipment suppliers like Applied Materials, Lam Research, and KLA are likely to suffer huge revenue losses in 2023 due to the US restrictions on China.
With artificial intelligence, self-driving vehicles and other technological advancements becoming increasingly important to enhance national competitiveness, chip foundries are playing a crucial role.
One such example is the production of OpenAI's ChatGPT by assembling numerous Nvidia's A100 chips, which are not allowed to be sold in China, to create a functional supercomputer.
With most of its memory chips manufacturing in China and increasing US concerns, South Korea aims to establish foundries on its own soil as it recognises contract chipmaking as a significant economic growth factor.
South Korean President Yoon Suk Yeol had earlier this month announced a plan to invest in a chipmaking cluster south of Seoul.
The proposal has drawn interest from South Korean chipmaking giant Samsung Electronics which is likely to invest 300 trillion won (~$230 billion) over the next two decades.
Additionally, Samsung is also constructing a semiconductor plant in Texas to gain more foundry business, with a focus on the US market.
Taiwan Semiconductor Manufacturing Co. (TSMC) remains the top global spender on fab equipment, with Taiwan expected to retain its lead.
Meanwhile, Japan's spending on the same is predicted to rise to $7 billion by 2024, according to SEMI.
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