South Korea pledged support for its chip sector on Thursday, with President Yoon Suk Yeol describing competition in the industry as “all-out war” amid heightened Sino-US tensions.
Earlier in the day, Yoon met with about 60 industry leaders, lawmakers and ministers to discuss how to maintain South Korea’s leadership in memory chips, boost system semiconductor development and secure materials, equipment and labor.
“Geopolitical issues have recently become the biggest risk for companies to manage. Companies alone cannot solve this problem – it is a problem that the nation should address by strengthening cooperation and close communication with like-minded countries such as the United States ,” Yoon told the meeting.
The government plans to help expand research and development, strengthen smaller players, strengthen legal protection for chip technology and set up chip testing facilities, the industry ministry said in a statement.
South Korea has sought to avoid becoming embroiled in a dispute between China and the United States over semiconductors.
On the one hand, chipmakers Samsung Electronics Co Ltd and SK Hynix Inc are dependent on American technology and equipment. At the same time, approximately 40% of South Korea’s chip exports go to China, according to data from the Ministry of Commerce.
When Washington announced restrictions on exports of chip-making tools to China last October, it granted a one-year exemption to Samsung and SK Hynix, which have manufacturing facilities there, so they could import the tools without applying for a license. It is unclear whether this exemption will be extended.
Ratings firm Fitch said on Wednesday it does not expect major long-term supply disruptions from the China-US chip dispute as South Korea becomes a major location for investment and technology upgrades by Samsung and SK Hynix.
“However, risks could increase if the dispute escalates in ways that more significantly affect the cost and availability of semiconductor supply chain components, including more extreme decisions or bans by the US or China,” Fitch Ratings said in a client note.
China accounts for 40% of Samsung’s NAND memory chip production capacity and 40% to 50% of SK Hynix’s DRAM production capacity and 20% of its NAND capacity, Fitch estimates.
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