KSIA urges China to be more transparent

By Kim Yoo-chul

Korea Semiconductor Industry Association (KSIA) Chairman Park Sung-wook has urged China to be more transparent about the subsidies it offers to Chinese semiconductor companies.

“I hope the Chinese government maintains a nondiscriminatory stance on the issue of subsidies to Chinese chip companies and that China should be more transparent about its subsidy policy,” Park told reporters during an industry event.

Park, who is also SK hynix CEO, made the remark on the sidelines of the World Semiconductor Council (WSC) meeting at the Sheraton Grande Walkerhill, eastern Seoul, Thursday.

The executive said Korean semiconductor companies should improve technology and increase investments to stay competitive.

“You could source financing from others,” Park said. “But technology development will only be possible upon the amount of seasoned and qualified personnel that each company has. The KSIA plans to provide support, if necessary.”

The remarks were in line with views shared by the U.S., which recently criticized China’s growing desire to step into the domestic semiconductor industry.

But China's ambition in the semiconductor market is no secret.

With demand for about $170 billion worth of semiconductors a year, the nation accounts for up to 50 percent of the world's total semiconductor consumption, giving China plenty of bargaining power in the industry.

China’s central government established the China IC Industry Fund (CICF, or the “Big Fund”) as the main vehicle of its policy push.

The fund is worth $21 billion but is designed to trigger as much as 10 times more investment from provinces, cities, state-owned enterprises (SOEs) and private companies and inject about $155 billion over the next five years into the industry, according to an analysis by Bernstein Research, a leading market research firm.

This aggressive policy has made the U.S. government uneasy. Washington recently criticized China for “artificially inflating” the number of subsidy programs it reports to the World Trade Organization (WTO).

The U.S. demanded answers about the buttressing of China’s domestic semiconductor industry, saying that the purpose of the CICF is to promote the growth of China’s semiconductor industry, with the funding provided in the form of an equity stake intended to give the government an active role as a shareholder, which violates WTO rules.

Jeon Young-hyun, president of Samsung Electronics, has remained calm on the issue, saying there were no Chinese government officials at this year’s WSC event.

Separately, TSMC co-CEO C.C. Wei said the world’s biggest foundry supplier is on track for enhancements to its latest 7-nanometer and 10-nanometer processing technology.

“Because Samsung Electronics is one of our clients, it’s inappropriate to talk about issues related to Samsung,” the TSMC CEO said. TSMC is battling with Samsung Electronics in the logic chip-making business.