Gov’t must support the chip industry

The Korean economy grew 1.3 percent in the January-March period against the previous quarter, its strongest on-quarter performance since the fourth quarter of 2021 amid the Covid-19 pandemic. The economy drew positive results on both external and domestic fronts, including consumption and investments in construction.

Exports were led by the chip recovery. SK hynix last week delivered an earnings surprise with its best-ever sales in the first quarter and its second-highest quarterly operating profit that beat market expectations by 40 percent. It owed its success largely to the increase in demand for high bandwidth memory (HBM) riding on the AI boom. In its earnings guidance released early in the month, Samsung Electronics estimated an operating profit of 6.6 trillion won ($5 billion), a tenfold increase from the previous year. In a fortunate development, Korea’s mainstay chip industry may have survived the lengthy down cycle.

Last week, SK hynix also announced that it plans to spend 20 trillion won building a DRAM facility in its NAND-focused complex in Cheongju, North Chungcheong, in contrast to its active investment in the U.S. by its memory competitors at home and abroad. The move suggests SK’s all-out bet on winning HBM supremacy in the high-end chip market. Multibillion-dollar investments in Korea create new jobs and vitalize the economy. This move will certainly help sustain Korea’s memory supremacy, too.

As much as taking responsibility for constructing roads and social infrastructure, the government must be active in building the infrastructure for the fourth industrial age.

The United States, Japan and Germany are going all-out to revive their past chip power by subsidizing semiconductor manufacturers on their home turf. Subsidy can help lower production costs and also offset investment risks. The Korean government also must consider granting subsidies to our own chipmakers on the condition that their investments go to strengthening their advanced chip processing capacity at home.

The government also has a role in assisting research and development for the next generation technology to maintain leadership in chipmaking. Subsidizing startups in chip design, chip materials and equipment can help enrich the chip ecosystem. The government must proactively solve infrastructure stumbling blocks to the chip cluster project in Yongin, Gyeonggi. The Ulsan city government cut short land and licensing process by 30 months for the building of Samsung SDI’s new 1-trilion-won battery plant by assigning officials specifically to the task. The central government must be equally eager to defend and support our chipmakers before it’s too late.