President Yoon Suk Yeol today announced a $422 billion investment by the country to accelerate the development of home grown manufacturing capability in everything from semiconductors to EVs, and of course, displays. Along with China, Japan, and the US, the spending battle to rule the global supply chain for the chips and devices that run tech is turning into an all out slug fest with the likelihood of a two decade stretch of economic warfare that will reshape global commerce.
Samsung is putting up $220 billion as part of its contribution to making South Korea a powerhouse in semiconductors, batteries, and displays. The US CHIPS and Science Act has played a role in mobilizing various forces around the world to reconsider long-held positions. For Chinese companies, there was a direct threat to their ability to operate successfully. For Japan (which dropped recent trade disputes with South Korea, Europe, and now, South Korea, it represents an existential threat. While Samsung may hope to benefit from some of the money the US government is throwing around, there just may be too many strings attached for it to be worthwhile. In fact, that seems to be a driving force behind the announcements coming out of South Korea. There may be a sense of urgency not to be constrained by the US and by urgency we mean, it takes a long time to build up fabs and create supply chains so, it’s now or never.
For the most part, South Korean manufacturers have had to rely on imports to maintain their market-leading position in display manufacturing. While it is not quite certain how much investment in South Korea’s display industry will directly impact its foreign suppliers of materials and manufacturing equipment, the significance and size of the investment will undoubtedly reverberate throughout the industry.
It is likely that the next 3-5 years will be a period of big investments in local startups, but also a period of consolidation which means M&A activities will rise as South Korea’s display industry looks to lock down any stray IP it may need. This is true of China (which may end up benefitting the most from US policy), this is true of the US, Japan, and to some extent, Europe. In reality, the nexus of battle is happening between the US and China, dragging neighboring companies in. This just might end up being a boom period for display companies of all ilks.
