Korea ‘absorbs’ global small and medium-sized equipment companies, going beyond venture investment to establishing R&D centers

Semiconductor equipment companies 'gathering together' in Korea, will they succeed in increasing influence?
With large customers such as Samsung and SK, “Korea is a country of investment opportunities”
Growing semiconductor ecosystem, job creation effect ‘expected’

Applied Materials, the world’s largest semiconductor equipment company, is establishing an R&D center in Osan, Gyeonggi-do. As the land purchase and construction permit processes have already been completed, the establishment of an R&D center appears to be only a matter of time. Recently, global semiconductor equipment companies such as Lam Research, Tokyo Electron (TEL), Applied, and ASML have begun to gather in Korea, and the influence of the domestic semiconductor ecosystem appears to be gradually expanding.

Applied, ‘countdown’ to establish Korea R&D center

According to what is known, Applied purchased a 17,938㎡ (5,426 pyeong) land located at 157-1 Gajeong-dong, Osan, Gyeonggi-do to establish a Korea R&D center. The subject is Applied Materials Korea Innovation & Technology, which was newly established by Applied for domestic R&D. Applied plans to operate at least 20 semiconductor equipment, including electron beam (e-beam), etching, and deposition, at the center and hire more than 100 domestic research personnel. Applied signed a memorandum of understanding (MOU) with the Ministry of Trade, Industry and Energy and Gyeonggi Province in July 2022 for the construction of a Korean R&D center. It was reported that the company later searched for a site widely in the Gyeonggi region, including Seongnam, where its Korean headquarters are located, as well as Yongin, Suwon, and Hwaseong, and ultimately chose Osan.

The R&D center site is administratively located in downtown Osan, but geographically it is located on the border with Hwaseong. This is interpreted as the result of prioritizing geographical advantages such as accessibility to the semiconductor factories of Samsung Electronics and SK Hynix, which are customers. The actual distance to major semiconductor factories is 12 km for Samsung Electronics’ Giheung factory, 9.8 km for Hwaseong factory, 19 km for Pyeongtaek factory, and 56 km for SK Hynix’s Icheon factory. It is also close to the Yongin High-Tech Semiconductor National Industrial Complex (19km) and Yongin Semiconductor Cluster (49km), where new Samsung Electronics and SK Hynix factories will be built, respectively. The site is located in Segyo District 3, a new residential area announced by the government in November last year, and surrounding roads are also scheduled to be reorganized. This means that the business infrastructure is sufficiently equipped.

The site purchased by Applied is where the existing building has been demolished, so construction can begin immediately after completing foundation construction. In particular, since construction permits have already been received, the start of construction of the R&D center has begun. Once Applied operates the center, it is expected to have a significant ripple effect as it will conduct research and development in Korea. It is expected to be useful in the development of next-generation process technologies and products, as not only the latest equipment but also new equipment that has not yet been released can be tested in Korea and used for semiconductor development. Job creation effects are also expected through domestic investment and recruitment of R&D personnel. Regarding this, an industry official said, “If Applied establishes an R&D center, all of the top four global semiconductor equipment companies, including Lam Research and TEL, which are already operating centers, and ASML, which recently announced plans to establish a joint research center with Samsung Electronics, will establish a domestic R&D base. “He emphasized, “It will be a stepping stone for Samsung Electronics and SK Hynix to maintain the technological gap in the global memory semiconductor market.”

Global companies establishing nests in Korea, why?

In this way, the fact that global small and medium-sized manufacturing companies began to establish themselves in Korea was largely influenced by the presence of many large domestic customers such as Samsung Electronics and SK Hynix. In fact, in 2022, Anand Kamanaba, an executive in charge of applied overseas investments, said about the reason for investing a large amount of money in Korea, “There are many startups in Korea with technology and manpower that are highly attractive for investment.” He also added, “Korea is a country of investment opportunities.” According to Applied, approximately 22% of Applied’s sales come from the Korean market. CEO Kamanaba said, “To make semiconductor equipment, you need suppliers of parts or modules, and Korea is well equipped with such a supply chain.” He added, “Because Korea’s growth will help the entire ecosystem and the development of our company, we will consider investing more actively.” “It is possible,” he said.

Due to this situation, companies other than Applied are also active. In particular, Edward, a UK-based vacuum pump company for semiconductor equipment, is actively expanding into the domestic market. Since June of last year, Edward has been operating a new facility in Asan, South Chungcheong Province, which has more than doubled the production scale of vacuum pumps for semiconductors and displays. Edward produces pumps for semiconductors and displays in Korea, accounting for 80% of its total production. Products made here are supplied not only to Korean customers such as Samsung Electronics and SK Hynix, but also to leading global companies such as Intel and Micron in the U.S. and TSMC in Taiwan, so this base is in fact a global semiconductor ‘hub’ for Edward. Recently, the company expanded its R&D facilities in Cheonan, South Chungcheong Province, concentrating global research personnel in Korea. This is evidence that the influence of the domestic semiconductor ecosystem is gradually increasing.