| | | $100-billion chip project caught in policy debate
Everyone wants it to be built, but they can’t agree on exactly where
Feb 13,2019
koreajoongangdaily.joins.com
excerpt:
A $100-billion next-generation semiconductor manufacturing complex, seen as vital to the country in maintaining its dominance in the market, is becoming a victim of politics.
As the price of memory chips plummets and their export declines, government and industry are joining to build the state-of-the-art facility. But the administration’s focus on developing regional economies is making the job that much more difficult and could lead to a less-than-optimal solution.
Observers are growing concerned.
“If political distribution is considered over the competitiveness of the semiconductor industry, which is currently largely responsible for exports, it will lead to a loss for the country,” said Lee Byung-tae, a professor at KAIST.
The government announced last year the development of a new semiconductor industrial complex to support the making of the chips of tomorrow. It will provide the land and the companies will invest in the manufacturing. The total value of the project is estimated to be 120 trillion won ($106.8 billion).
The decision came as the country works to maintain its dominance in the market and maintain production in the face of an industry slowdown. Semiconductors are vitally important for Korea. They account for 16 percent of total exports, the largest category, while the two main companies, Samsung Electronics and SK Hynix, have more than 73 percent of the global DRAM market in terms of revenue.
Signs of a weakening abound as the supercycle in memory chips seems to be coming to an end. Export prices for DRAMs were $5.74 per unit in December last year, down 37.2 percent compared to the previous year, according to a report from Daishin Securities.
Despite the urgency, local governments have been squabbling over who should get the site.
Cities near the capital, such as Yongin and Icheon in Gyeonggi, have argued they are most suitable, noting their proximity to the capital and their established infrastructure. Gumi in North Gyeongsang and Cheongju in North Chungcheong have emphasized balanced regional development, a government priority.
SK Hynix is at the center of the storm, as it is likely to operate the complex. Samsung Electronics, the country’s other top semiconductor maker, already has room to develop future capacity in Pyeongtaek and Giheung, Gyeonggi.
continues at koreajoongangdaily.joins.com
[The Asian model of capitalism has governments giving huge amounts of support to companies that they consider "key". Sometimes it gets in the way. But they certainly get plenty of benefits too.]
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