South Korean president Yoon Suk Yeol said on Thursday competition in the chip industry had become an “all-out war” following heightened tensions between China and the United States.
Yoon vowed to support the South Korean chip sector with plans to help expand research and development, bolster smaller players, strengthen legal protection for chip technology and set up a chip testing facility.
“Geopolitical issues have become the biggest risk for companies to manage as of late. Companies alone cannot resolve this problem – it is one that the nation should tackle by strengthening cooperation with and closely communicating with like-minded countries like the United States,” Yoon said.
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Yoon’s comments came at a meeting with about 60 industry leaders, lawmakers and ministers aimed at discuss maintaining South Korea’s lead in memory chips, fostering development of system semiconductors, and securing materials, equipment and labour.
South Korea has sought to avoid becoming embroiled in a tit-for-tat row between China and the United States over semiconductors.
On one hand, chipmakers Samsung Electronics and SK Hynix depend on US technology and equipment. At the same time, about 40% of South Korea’s chip exports go to China, trade ministry data showed.
When Washington announced restrictions on exports of chip-making tools to China last October, it issued a one-year waiver for Samsung and SK Hynix, which have manufacturing facilities there, so they could import tools without having to apply for a licence. Whether that waiver will be extended is not clear.
Credit-rating firm Fitch on Wednesday said it did not expect major long-term supply disruption from the Sino-US chip war as South Korea would become the main location for Samsung and SK Hynix’s investment and technology upgrades.
“However, risks could increase if the dispute escalates in ways that more markedly affect the cost and availability of semiconductor supply-chain components, including more extreme rulings or bans by either 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 estimated.
- Reuters, with additional editing by Vishakha Saxena
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