[Editorial] Unity needed before the global chip war

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[Editorial] Unity needed before the global chip war

The Yoon Suk Yeol administration has presented an ambitious plan to develop cutting-edge industries, like semiconductors, future cars, space and nuclear reactors, on 15 massive clusters around the country. Private companies will invest a whopping 550 trillion won ($420.7 billion) in six categories, including chips, while the government spends 25 trillion won in 12 critical R&D projects. If the national project is completed, Korea is expected to turn into a powerful manufacturing base again.

What attracts particular attention is a government plan to establish a cutting-edge system chip cluster in Yongin city, Gyeonggi. The government wants to set up a 7.1-million-square-meter (1,754-acre) national industrial complex in the city, while Samsung builds five system chip factories there by spending 300 trillion won by 2042. The complex will be systematically linked to chip plants in Giheung, Pyeongtaek and Icheon cities in the province to draw chip materials, parts and equipment supplies to transform it into a mega semiconductor cluster.

The world is witnessing an ever-tense battle over sophisticated chips, a pivot to national competitiveness. The United States decided to induce global chips names to invest in America in return for $52 billion in subsidies over the next five years. The European Union seeks to raise its global chip market share up to 20 percent by investing 43 billion euro ($46.2 billion) through its own equivalent of the U.S. chip act. Taiwan is devoted to support TSMC, No.1 foundry in the world.

The bold design for the chip cluster in Yongin is aimed at taking the leadership in the chip sector. In fact, Korea is a major chip power, but stopped short of having a semiconductor strategy on national levels. In the meantime, the country lost its technology leverage and the gap between Samsung and TSMC in the foundry market has been widened to 58.5 percent vs. 15.8 percent. Samsung’s plan to expand its chip-production facility in Korea came nine years after the completion of its Pyeongtaek campus.

What matters now is execution and speed. If the national project is to be completed smoothly, muti-layers of regulations should be lifted. The national project also must avoid criticism for concentration on the capital region. Another challenge comes from a lack of manpower with expertise in chipmaking. But the dice is cast. The president must push the bold project for Korea to take back its chip leverage.

Korea’s future depends on the strength of high-tech industries. If a bill aimed to provide subsidy and tax incentives for chip investment is stuck in the legislature due to a sharp conflict of interest, the country has no future.
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