The government of South Korea is working towards financial and regulatory reform for the chip industry and investing 340 trillion won in the coming five years, with potentially 150,000 job creations as well. Chips have increasingly been touted as economic security assets around the world, therefore South Korea is also working towards its chip supremacy.
Semiconductor chips have been the country’s top export item for decades, almost making up 20 per cent of the total exports. Although recently the chip industry has faced a bottleneck as it is grappling with supply chain issues and global competition. The new scheme is aimed to ease regulatory blockades for the chip industry. The government intends to raise the permissible floor area ratio of the nation’s two chipmaking plants in Pyeongtaek and Yongin, both in Gyeonggi Province, to have additional cleanrooms, where silicon wafers are manufactured into chips, to help create more jobs. One cleanroom generates around 1,000 new jobs.
“Competition in the chip industry is getting severe,” Trade Minister Lee Chang-yang told reporters during a memorandum signing event held at the head office of Dongjin Semichem, a local chemicals firm that has recently succeeded in developing a photoresist for extreme ultraviolet (EUV) lithography, an industry first here. “We will respond flexibly to market conditions in order to maintain our super gap competitiveness.”
The US, South Korea’s biggest backer, is propelling the initiative, which aims to oppose China’s influence in the region as well as boost its technology capabilities. Seoul has not yet divulged its stance on the issue of chip supremacy, amid heightened pressure from China, its biggest trading partner. “Tax deductions need to be further extended considering the US is seeking to offer up to 40 per cent of tax deductions for new facility investments,” said Yoo Hwan-Ik, an industry division chief at the Federation of the Korean Economies, a business lobby here.
