The budgets are less than originally planned…It will be difficult to induce enterprises to participate.
The ‘mobile CPU’ localization project, which has been regarded as the core of the Korean government’s system semiconductor industry promotion strategy, may fizzle out. The CPU core chip localization project, which started out ambitiously, is making a shaky start due to the reduced government budgets and the controversy over commercialization after R&D.
According to the government and industries on January 19, the government budgets for the mobile CPU core localization project were finalized at KRW9 billion over a 3-year period (KRW3 billion each year). Originally the Ministry of Trade, Industry & Energy intended to inject KRW35 billion (the government KRW25 billion and the private sector KRW10 billion) over a 5-year period, but the actual government budget was reduced to 1/3. The Korea Evaluation Institute Of Industrial Technology (KEIT) recently announced the ‘Local CPU Code Utilization SoC Development’ project and began to recruit corporate participants.
The key to the mobile CPU core localization project is to replace the core components of the mobile application processor (AP), which is dependent on ARM, with local technologies. The mobile AP is an important semiconductor that is installed in smartphones and, consumer electronics and serves as the brain in charge of handling operations and commands. If the Internet of Things (IoT) market, which is highlighted as a future industry, grows bigger, electronic devices with the AP will increase. So its usefulness and importance do not need to be mentioned.
The government planned this project to depart from dependence on the technologies of certain foreign companies and enhance the viability and competitiveness of local technologies. It aims to overcome the issue of Korean companies paying more than KRW350 billion in royalties on mobile CPUs every year, and raise the technological level of the local system semiconductor industry by localizing the application processor. The government also intends to respond to the increasing demands for small and medium-sized CPUs with the advent of the IoT and diverse wearable devices.
Unlike the original plan, however, related budgets were sharply cut in the deliberation process. The project ran into an ‘unexpected snag in budget allocation’ in the first year of the project.
Participants (enterprises and research institutes) in the government project must use local CPU cores, e.g. △ ‘EISC’ of AD Chips △ ‘MENSA’ of the Korea Electronics Technology Institute △ ‘Aldebaran’ of ETRI △ ‘Core-A’ of KAIST and the Korean Intellectual Property Office to develop system semiconductor. However, it is difficult to predict how many companies will be able to participate in the R&D and commercialization when the budgets are insufficient.
The industry maintained that a lot of efforts must be continuously made from the early stage of the project for successful R&D and post-R&D commercialization. For Korean enterprises to secure equivalent technologies and business value when the initiative is seized by a few foreign companies, unprecedented support will be necessary. Large semiconductor makers like Samsung Electronics and SK Hynix, which were nimble-footed in AP development and commercialization, were of the same opinion.
“Now that the government support has been cut, even if the development of local CPU chips is successful, it is unclear how much demand can be generated,” said a system semiconductor industry insider. “As support and demands are uncertain, there are concerns over whether many fabless companies will carry their bats until the commercialization stage.”
About this, the government said that some budgets were cut, but there would continue to be a lot of policy support for system semiconductor promotion and CPU localization projects. “We can respond to the gigantic IoT market with our own technologies only when we localize the mobile CPU core,” said an MOTIE insider. “Reduced budgets do not mean that the project is any less important, and budgets may increase in the future depending on circumstances.”