South Korean Government is planning to stop South Korean semiconductor and display manufacturers from building additional facilities in China as it is worried that it may lose its competitive edge in state-of-the-art industries from state-of-the-art technologies being leaked. It seems that it considered creation of jobs and retaliation for THAAD (Terminal High Altitude Area Defense) into its decision-making.
Due to this policy made by South Korean Government, businesses such as Samsung Electronics, SK Hynix, and LG Display that were looking to build additional facilities in China have gone into a state of emergency as this policy can cause a setback to their plans. They are worried that they will lose opportunities from ‘Time to Market’ as they will not be able to supply their products on time if they are late on building additional facilities in China where there is a lot of customers.
Minister Baek Woon-kyu of Ministry of Trade, Industry and Energy (MOTIE) stated that it will be better for South Korean semiconductor and display manufacturers to rethink about going into Chinese market at a meeting for semiconductor and display industries which was held at Yoido Kensington Hotel on the 18th. Industries’ major executives such as Vice-Chairman Kwon Oh-hyun of Samsung Electronics, Vice-Chairman Park Sung-wook of SK Hynix, and Vice-Chairman Han Sang-beom of LG Display were in attendance at this meeting.
Minister Baek recommended Samsung Electronics to rethink about building additional facilities in Xi’an at this private meeting that lasted about an hour. “Why do you have to build facilities in Xi’an when you can build them in South Korea such as Pyeongtaek?” said Minister Baek. “Look at how Lotte was revenged due to THAAD. Although none of South Korean semiconductor manufacturers is not revenged yet, same thing will happen when Chinese businesses chase after South Korea’s technologies.” It is heard that Vice-Chairman Kwon Oh-hyun avoided giving a direct answer to Minister Baek.
Samsung Electronics announced last August that it is going to invest $6.92 billion (7.8 trillion KRW) into Xi’an, Shanxi for next 3 years and build second facility for 3D NAND flash memories. It also signed off on a MOU (Memorandum of Understanding) with Shanxi. SK Hynix also announced that it will be making investments in order to build additional facilities for DRAMs in Wuxi, China.
Industries are worried that negative opinions expressed by Minister Baek will cause setbacks to their strategies on sales and investments as South Korean Government can come up with an unsuitable decision at an approval committee.
DRAM, NAND flash, and OLED display are designated as national major technologies. Technologies that received government funding need to be based on ‘Prevention and Protection of Leakage of Industrial Technologies Act’ and need to be approved by South Korean Government before they are exported. If they do not receive approvals, foreign businesses can utilize corresponding technologies and produce products through them. When Samsung Electronics was building its first production line for 3D NAND flash memories in Xi’an, it only made reports to South Korean Government under a reason that its 3D NAND flash memories did not receive government funding. Because variety of element technologies is converged when semiconductors are manufactured, experts are seeing that Samsung Electronics’ 3D NAND flash memories may need to get approved depending on interpretations. When South Korean Government makes such interpretation, Samsung Electronics has to stop building its new facilities in China immediately.
LG Display, which was planning to build facilities for 8th generation OLED displays in Guangzhou, is in an immediate state of emergency. LG Display has been discussing with South Korean Government since early this year about entering Chinese market. However discussion was delayed due to impeachment of political situation at that time and greater possibility of Chinese Government’s retaliation on THAAD. It is worried that it may lose its timing to sell its products when discussion with South Korean Government is delayed.
“Evaluation of LG Display’s investments finally started last month.” said a representative in this industry. “It is heard that Minister Baek formed a separate small committee due to a reason that current industrial technology protection committee for display industries lacks professionalism and instructed a small committee to reexamine LG Display’s investments from square one.”
“Our LCD businesses entered Chinese market and was eventually caught up by Chinese businesses.” said Minister Baek while meeting with reporters. “Chinese businesses are making large-scale investments into semiconductors and are threatening South Korea by approaching OLED industry as well.” Minister Baek also publically announced his negative opinion by saying that South Korea’s technologies are being leaked inevitably through South Korean businesses’ partners although South Korean businesses’ goals are to pioneer foreign markets.
Semiconductor and display industries announced at this meeting that they will invest $46 billion (51.9 trillion KRW) into South Korea until 2024.
Staff Reporter Bae, Okjin | & Staff Reporter Han, Juyeop |