Yoon calls for public-private cooperation to remain competitive in chips

Korean President Yoon Suk Yeol, center, presides over a regular economic meeting in Seoul on June 8. [Photo by Lee Seung-hwan]

The South Korean government is going all out to maintain the country’s lead in the semiconductor industry, with the help of the private sector.

“Competition over chips is an industry war,” said Korean President Yoon Suk Yeol on Thursday during a regular economic meeting in Seoul.

“Not only smartphones and automobiles but also satellites and strategic weapons systems depend on the performance of chips installed inside them,” Yoon said.

He added that “chips make it possible to realize up-to-date technologies such as artificial intelligence (AI) or quantum computing.”

In particular, semiconductors have become the core of security as AI is applied to the military sector, he said.

Yoon noted that the semiconductor sector is one of the country’s mainstay industries that account for 20 percent of its entire exports and 55 percent of facility investments in the manufacturing sector.

Yoon called for the public and private sectors to join efforts to tackle emerging challenges.

His remarks come at a time when the global chip industry is undergoing huge upheaval amid the competition for supremacy between the U.S. and China.

Yoon also noted that the recent passage of the K-Chips Act has significantly expanded incentives for corporate investment and eased various regulations.

The passage has led the private sector to respond with bold investments, such as the establishment of the world’s largest system semiconductor cluster worth 300 trillion won ($231.45 billion) that will be created in Yongin, Gyeonggi Province.

Korean President Yoon Suk Yeol presides over a regular economic meeting in Seoul on June 8. [Photo by Lee Seung-hwan]

In March, the National Assembly passed the K-Chips Act, which gives bigger tax incentives to chipmakers and other strategic businesses through a revision to the Act on Restriction of Special Taxation.

Yoon ordered the economy-related ministers during the meeting to “remove any regulations that are considered obstacles.”

In particular, Yoon asked Financial Services Commission (FSC) Chairman Kim Joo-hyun to “design a financial support system for cutting-edge digital companies.”

During the meeting, the Ministry of Trade, Industry and Energy unveiled the direction of national semiconductor policy.

Under the direction, the government will carry out the ongoing processing-in-memory (PIM) research and development (R&D) worth a total of 400 billion won by 2028 to secure super-gap technologies. It will also promote the next-generation PIM project with a total of 1.96 trillion won by 2029.

The ministry also plans to conduct a preliminary feasibility study worth 1.4 trillion won to secure technologies such as power semiconductors and automotive semiconductors.

Furthermore, in order to expand the memory-centered semiconductor value chain into the system semiconductor sector, the ministry will extend active support to strengthen cooperation between domestic fabless companies specializing in chip designs and foundry companies that manufacture chips for fabless companies.

The ministry will push to build an advanced semiconductor technology center (ASTC), a Korean version of Interuniversity Microelectronics Center (IMEC), through a public-private partnership following a preliminary feasibility study. IMEC is Europe‘s largest non-profit comprehensive semiconductor research center.

The government plans to use the ASTC for international cooperation. During the Korea-U.S. summit in April, the leaders agreed to seek cooperation between the ASTC and the National Semiconductor Technology Center (NSTC), which the U.S. is also working to establish, from the initial stage.

The government plans to invest a total of 223 billion won over the next 10 years to promote demand-tailored workforce training projects.

To boost corporate investment, the government will increase the investment tax credit rate to 15 percent from 8 percent, relax the floor area ratio for semiconductor production facilities, and provide substantial policy financing for semiconductor companies.

The government plans to provide a total of 2.8 trillion won in aid to the industry by 2027, starting with 500 billion won this year.