Korea to remain key player in semiconductors

This file photo shows Samsung Electronics' chip production plant in Pyeongtaek, Gyeonggi Province. Reuters-Yonhap

Few sectors are as critical to the Korean economy as semiconductors. Fewer yet have changed as dramatically in recent years. From the pandemic-era surge in chip demand and subsequent shortage through to the artificial intelligence (AI) revolution and trade restrictions, technology and U.S.-China frictions are reshaping the sector at an unprecedented pace. But for all the forces redefining global supply chains, Korea will remain a key player in the world’s chip market.Subsidies are luring Korean and Taiwanese chip producers to set up factories on foreign shores. The U.S. CHIPS and Science Act provides $52.7 billion for semiconductor research, development, manufacturing and workforce development on American soil. Europe and Japan are providing similar incentives. Chip shortages and China’s ambitions to grow its own semiconductor capabilities have added urgency to these efforts.

Setting up foreign operations can be lucrative. Samsung Electronics, which plans to expand semiconductor production in the U.S. state of Texas, stands to receive up to $6.4 billion in direct funding under the CHIPS Act. Memory chip maker SK hynix may be following suit, with media reports saying it is looking to establish itself in Indiana. Such moves stand to put both companies on the doorstep of end consumers. When supply chains widen — for chips or any product — costs rise. In the United States, new chip plants will rely on imported materials from Asia and machinery from Japan, Europe or both. And U.S.-made chips will still get shipped to Asia for assembly, testing and packaging, at least for the foreseeable future.Over time, new plants will foster an ecosystem of upstream and downstream businesses catering to their needs. This will make chip supply more resilient against shocks. But that means increased redundancy, which equates to higher costs and smaller margins.Despite the gravitational pull of foreign subsidies, it’s hard to see Asia’s chip giants turning their backs on the region. For now, Asia’s supply chain offers superior access to chip production capacity, materials and equipment. Having producers of consumer electronics right next door also 온라인카지노 helps

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