2024-03-31 23:59:34
As the global semiconductor market enters a recovery phase, Korea’s trade balance, based on exports, is also showing a clear improvement. However, as the competition for semiconductor hegemony around the world rekindles due to the recovery of the industry, the so-called ‘War of Zhen’ appears to be intensifying.
According to the Ministry of Trade, Industry and Energy and the semiconductor industry on the 1st, Korea’s trade balance is clearly improving as solid export growth, centered on semiconductors, has continued this year.
First Vice Minister of Trade, Industry and Energy Kang Kyeong-seong presided over the ‘3rd Export Product Manager Meeting’ on the 19th and said, “Exports are on the rise this month (March) as the export trend of key items continues, centering on information technology (IT) items such as semiconductors. He predicted, “The surplus flow will continue.”
As Vice Minister Kang mentioned, signs of recovery in the semiconductor industry are also revealed in various data.
According to the ‘Industrial Activity Trends for February 2024’ announced by Statistics Korea on the 29th of last month, the production index for all industries (excluding seasonal adjustment and agriculture, forestry and fisheries) in February was 115.3 (2020 = 100), an increase of 1.3% from the previous month.
After rebounding by 0.3% in November of last year, it has been about two years since we recorded four consecutive months of increase in December (0.4%), January (0.4%), and February (1.3%).
There are semiconductors here. Semiconductor production, which fell 8.2% in January, increased 4.8% in February. Compared to the same period last year, it is a 65.3% increase. Semiconductor inventory also decreased by 3.1% compared to the previous month.
The increase in semiconductor production also led to other related investments. Facility investment in February increased 10.3% from the previous month, which is the highest increase in 9 years and 3 months since November 2014 (12.7%).
Investment in both transportation equipment (23.8%) and machinery (6.0%) increased compared to the previous month. As the semiconductor industry improved, investment in manufacturing machinery and transportation equipment such as ships increased.
In terms of exports, there was also a clear improvement due to the recovery in semiconductor performance.
According to the Ministry of Trade, Industry and Energy, cumulative exports from January to February recorded $107.2 billion, an increase of 11.2% compared to the same period last year, continuing a positive streak for five consecutive months.
During this period, semiconductor exports by item increased by 61.4% (compared to the same period last year), driving the increase.
In ‘ICT export and import trends in February 2024’, exports of both memory (108.1%) and system (27.2%) semiconductors increased as the growth of the artificial intelligence (AI) market led to increased demand for semiconductors. Continuing double-digit growth for four consecutive months, exports amounted to $9.96 billion.
While various economic indicators are showing signs of recovery as the semiconductor market is booming, the so-called ‘chip war’ between the world’s major countries over semiconductor hegemony appears to be intensifying again.
The United States and major countries, which have launched a preemptive attack with export control measures to keep China in check, are leading investment in their countries using ‘subsidies’ as a weapon. The so-called ‘War of Tricks’ for semiconductors is intensifying as advanced countries such as the United States and Japan attract production facilities of leading semiconductor companies with large subsidies.
The United States has enacted the so-called ‘Semiconductor Act’ and provides production and research and development (R&D) support of $52.7 billion over five years to companies building semiconductor factories in the country. Samsung Electronics, which invested more than $17 billion (about 22.8 trillion won) in its foundry plant in Texas, is expected to receive a subsidy of $6 billion (about 8 trillion won).
Japan, which ruled as a semiconductor kingdom until the 1980s, is also generously providing support, dreaming of a second revival. Recently, Taiwan’s TSMC Plant 1, the world’s largest foundry company, opened in Japan, and there was a huge gift package from the Japanese government.
It is reported that the Japanese government will support TSMC with 476 billion yen (approximately 4.2 trillion won), which is close to half of the facility investment. In addition, it is reported that TSMC will provide approximately 730 billion yen (approximately 6.5 trillion won) in support to the second factory scheduled to be built in Kumamoto Prefecture with the goal of operating at the end of 2027. More than 10 trillion won in subsidies from the Japanese government are being invested in these two factories alone.
There are voices calling for our government’s strategy to be reexamined in response to these countries’ offensives.
In the case of Korea, the focus is on indirect support such as tax benefits when investing, but it is argued that this should be converted to a direct form of support.
In fact, last February, semiconductor businessmen, including Samsung Electronics (005930) semiconductor (DS) division head (president) Kyeong-hyun Kwak and SK Hynix (000660) president Kwak No-jeong, held a meeting with Minister of Trade, Industry and Energy Ahn Deok-geun to establish new investment subsidies and support semiconductor mega cluster infrastructure. It was also suggested to improve the investment environment, such as expansion and establishment of a test bed for material managers (materials, parts, equipment).
Afterwards, the government held the ‘5th National High-Tech Strategic Industry Committee’ chaired by Prime Minister Han Deok-soo on the 27th of last month and presented directions for support for the construction of infrastructure such as power and water in areas specialized for high-tech industries such as semiconductors. However, it was decided to take more time to review whether to provide direct investment subsidies to the semiconductor industry.
Kyung Hee-kwon, an associate researcher at the New Industry Department at the Korea Institute for Industrial Economics and Trade, said, “Japan provides direct subsidies to its own semiconductor companies, and the United States provides support of close to 50% by adding direct subsidies to tax credits at the time of investment.” “Even if it is difficult to achieve this, there is a need to establish a system that can urgently provide direct funds in case the semiconductor market has recently bottomed out and corporate profitability has plummeted,” he advised.
(Sejong = News 1)
2024-03-31 23:59:34