Ambitious high-tech cluster

The Korea Times

The Korea Times

Opinion

Sat, December 9, 2023 | 21:06

Editorial

Ambitious high-tech cluster

Posted : 2023-03-16 16:50

Updated : 2023-03-16 16:50

All-out efforts needed to survive global chip competition

South Korea is seeking to set up a massive semiconductor cluster in Yongin, Gyeonggi Province, with Samsung Electronics pouring in some 300 trillion won ($229 billion) by 2042. The world's largest high-tech chip complex is aimed at sharpening the nation's prowess in non-memory chip technologies such as system chips, the trade and land ministries said, unveiling the plan during a Cabinet meeting Wednesday.

Despite its competiveness in the memory chip sector, Korea has lagged behind in system chips. Given this, Samsung will construct five more chip plants in addition to existing factories in southern Gyeonggi Province. The ministries said the complex will become an unprecedented chip mega cluster.

The Yoon Suk Yeol administration is also planning to provide full-fledged support to nurture six strategic industries ― semiconductors, displays, batteries, bio, electric cars and robots ― and build high-tech industrial parks in 15 locations across the country. In areas outside the Seoul metropolitan area, Samsung will invest an additional 60 trillion won. The president vowed to take all possible measures to facilitate businesses' investment activities. "The high-tech industry is a core growth engine (for the national economy) and a strategic asset for national security," Yoon said during the meeting.

The decision is welcome in that it comes amid an intensifying hegemony war between the United States and China surrounding chips. The U.S. has been mounting pressure on its allies to join its initiated chip alliance, coercing them with seemingly "excessive" requirements. Against this backdrop, it has been essential for Korea to be equipped with competitive edges in the high-tech sector such as the chip industry.

Despite the dire need to tackle the daunting challenges, the nation has largely failed to take proper steps. For starters, it has yet to remove diverse regulations standing in the way of investment. Concern is also growing over the possible weakening of growth momentum ahead of the looming Fourth Industrial Revolution, buffeted by a swiftly decreasing population amid low fertility rates coupled with rapid aging.

Given this, an increasing number of enterprises have been avoiding investing in the local market, rushing to overseas destinations. The chip industry has been most vulnerable to such challenges.

The high-tech complex has been inevitable for the production of system chips. Samsung has been under growing pressure from the Biden administration to build more plants in the U.S. Yet it has failed to construct a single plant here since 2014 when it completed the Pyeongtaek campus. This has been chiefly due to various regulations regarding land use and taxation.

Samsung needs to double down on taking the lead in the production of system semiconductors by introducing state-of-the-art manufacturing processes. The Yoon government should focus on helping companies construct plants at the earliest date possible. Lawmakers in the National Assembly should also roll up their sleeves to facilitate investments.

In this vein, it is fortunate to see the main opposition Democratic Party of Korea (DPK) shifting its stance to support the relevant companies. Albeit belatedly, the ruling People Power Party (PPP) and the DPK agreed to pass a bill for the provision of tax benefits to chip companies next month.

The U.S. and EU are desperate to nurture the chip industries by offering huge amounts of subsidies to the plants in their territories. Japan has recently designated the chip sector as its strategic industry. Boosted by the rising demand for ChatGPT, Taiwan's TSMC has registered record sales for two consecutive months this year. In contrast, Korea's exports of semiconductors declined 40 percent during the same period, adding to the current account deficits.

It is high time for the nation to make concerted efforts to rejuvenate chip and other high-tech industries, such as aerospace, robotics and bio. The central and provincial governments alike should offer maximum support to the investing firms in terms of land use, human resources and tax benefits.