South Korea vows support for its chip sector amid China-US tensions

SEOUL (Reuters) – South Korea pledged support for its chip sector on Thursday, with President Yoon Suk Yeol describing competition in the industry as an “all-out war” amid heightened U.S.-China tensions.

Earlier in the day, Yoon met with about 60 industry leaders, lawmakers and ministers to discuss how to maintain South Korea’s lead in memory chips, foster development of system semiconductors, and secure materials, equipment 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.

The government plans to help expand research and development, bolster smaller players, strengthen legal protection for chip technology and set up a chip testing facility, the industry ministry said in a statement.

South Korea has sought to avoid becoming embroiled in a tit-for-tat row between China and the United States over semiconductors.

On one hand, chipmakers Samsung Electronics (OTC:) and SK Hynix depend on U.S. technology and equipment. At the same time, about 40% of South Korea’s chip exports go to China, according to trade ministry data.

When Washington announced restrictions on exports of chip-making tools to China last October, it issued a one-year waiver for Samsung (KS:) and SK Hynix, which have manufacturing facilities there, so they could import tools without having to apply for a licence. Whether that waiver will be extended is not clear.