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Amid Friction Between China And The US, South Korea Pledges Support For Its Chip Industry

Amid Friction Between China And The US, South Korea Pledges Support For Its Chip Industry
On Thursday, in the midst of escalating Sino-U.S. animosity, South Korea reaffirmed support for its chip industry, with President Yoon Suk Yeol referring to the industry's competition as a "all-out war".
Yoon met with approximately 60 business executives, legislators, and ministers earlier in the day to discuss how to protect South Korea's competitive edge in memory chips, promote the growth of system semiconductors, and ensure the availability of raw materials, capital, and labour.
"Geopolitical issues have become the biggest risk for companies to manage as of late. Companies alone cannot resolve this problem - it is one that the nation should tackle by strengthening cooperation with and closely communicating with like-minded countries like the United States," Yoon told the meeting.
According to a statement from the industry ministry, the government intends to support more R&D, support smaller firms, tighten legal protection for chip technology, and establish a chip testing facility.
In a spat over semiconductors between China and the United States, South Korea has tried to stay out of it.
On the one hand, American technology and apparatus are necessary for chipmakers Samsung Electronics Co Ltd and SK Hynix Inc. According to data from the commerce ministry, China receives around 40% of South Korea's chip exports at the same time.
It is unclear if that waiver will be continued.
Credit-rating agency Fitch stated on Wednesday that it did not anticipate a significant long-term supply disruption as South Korea would become the primary location for investments and technological advancements by Samsung and SK Hynix.
"However, risks could increase if the dispute escalates in ways that more markedly affect the cost and availability of semiconductor supply-chain components, including more extreme rulings or bans by either the U.S. or China," Fitch Ratings said in a client note.
According to Fitch, China produces 20% of SK Hynix's NAND capacity, 40% of Samsung's NAND capacity, 40% to 50% of SK Hynix's DRAM capacity, and 40% of Samsung's NAND capacity.

Christopher J. Mitchell

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