As SK hynix officially denied a Japanese media report that it would invest 2 trillion yen (about 18 trillion won) to build a memory chip plant in Japan, it has been confirmed that Samsung Electronics and SK hynix have received proposals in recent years from the Japanese government and local authorities to establish semiconductor plants. However, the two companies have reportedly declined for years, taking into account domestic politics and public sentiment.
According to the industry on the 23rd, senior management at Samsung Electronics and SK hynix are said to have conducted reviews at the cost estimate level in recent years regarding building a semiconductor plant in Japan. Although they never reached a decision stage to actually build a production line, the Japanese government and local authorities expressed their intent to offer aggressive benefits.
A senior official in the Samsung Electronics semiconductor institutional sector said, "In terms of investment expense and total cost of ownership (TCO), the expense of building and operating a memory production line in Japan is about half that of Korea," adding, "There are no notable benefits for building a plant at home, and there are even incidental expenses, whereas the Japanese side proposes a 'full-package' of support to attract a plant to their country, from taxes and infrastructure support to talent and connections with local equipment vendors."
The Japanese government has used a package strategy combining large-scale subsidies, investment diplomacy, and support for talent and supply chains to attract production bases of overseas semiconductor corporations. This goes beyond simple promotion to lower plant construction expense and provide site, talent, and policy stability jointly by the central government and local authorities.
The most representative tool is capital expenditure subsidies. The Ministry of Economy, Trade and Industry (METI) offered up to 476 billion yen in support for JASM's Kumamoto plant, the Japanese subsidiary of Taiwan's TSMC, and later announced additional support for the second investment, strengthening its competitiveness in the bidding.
Micron of the United States also received subsidies in stages for expanding production capacity at its Hiroshima plant and for next-generation DRAM investment, inducing capital spending. Support from the Japanese government is also continuing for the joint production base of Western Digital of the United States and Japan's Kioxia.
Investment diplomacy was also pursued in parallel. Former Prime Minister Fumio Kishida designated semiconductors as a key industry for economic security and met directly with executives of global semiconductor corporations to ask for expanded investment in Japan. Observers say this is because the Japanese government did not leave semiconductor investment solely to private corporations, but treated it as a "national-level project," with the prime minister's office and relevant ministries taking the lead.
However, Samsung Electronics and SK hynix are reportedly not considering the option of building a semiconductor plant in Japan for now. While establishing a plant in Japan would be the safest choice in terms of expense and medium- to long-term growth potential, they are not free from public sentiment and pressure from the government and local authorities.
A semiconductor industry official said, "From the standpoint of the two corporations, investing in Korea can only be inefficient," noting, "In addition to taxes, subsidies, and infrastructure construction expense, all kinds of demands from local authorities cause expense leakage, and depending on the administration, they even demand dispersed investment to regions such as Honam, pressuring semiconductor corporations at a level that is effectively close to business obstruction."