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(EDITORIAL from Korea JoongAng Daily on May 20)

All News 06:57 May 20, 2022

Chips first, all else to be discussed Saturday

U.S. President Joe Biden will head straight to the Samsung Electronics Pyeongtaek chip complex upon arrival in Korea on Friday. A U.S. president is making a rare visit to a business site outside the capital amid the rise of chips as global strategic assets.

Former Korean President Moon Jae-in held a chip strategy meeting at the Pyeongtaek site. Chips have become important not just for a country but for the Korea-U.S. alliance.

A company has been alone in paving the way in chip development in the past. Samsung Electronics has maintained leadership after milestone development of the 64K DRAM in 1983.

But Korean chip supremacy is in danger. Samsung Electronics stock is mired in the 60,000-won ($47) level despite unwavering buying by retailer investors due to poor prospects. Challenge is everywhere. TSMC of Taiwan and others have been aggressively ramping up with full government support.

The tech contest between the U.S. and China and fourth industrial revolution have triggered the race. Governments are encouraging chip production in line with the surge in demand from digitalization and the rise of platform economy.

Due to strong demand for non-memory chips, fabless designers and foundries that produce chips under contract with outside designs are expanding fast. South Korean chipmakers focused on memory are new to the situation.

TSMC is unrivalled in the foundry area. Samsung has been expanding the Pyeongtaek complex and SK hynix is building a massive chip cluster in Yongin, but little progress has been made due to government regulations and disputes over land compensation.

Taiwan lacks water as it is an island, but it cuts off water for farming to keep enough for chipmaking. Taiwan has become a chip powerhouse within five years. It is expected to outpace South Korea in per capita income this year.

U.S. and the European Union have made laws to enhance chip industry in their territories. Japan is reinforcing chip capacity in partnership with the U.S. and Taiwan. China and India are also eager in chip production. South Korea's dominance could be timed.

South Korea is joining the U.S.-led Indo-Pacific Economic Framework(IPEF). The core is to establish network among allies in strategic products like chips and batteries.

Since Korea relies on U.S. imports for 45 percent of the equipment necessary for chipmaking, it inevitably must join the IPEF. Chips have become the linchpin in the economic, security, and technology alliance. The government must provide all possible support so that Korea can keep ahead in the competition through technological advances.
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