The South Korean semiconductor industry voices concerns over the government’s possible move to tighten regulations on the industry, saying such a move would undermine local chip developing and packaging companies’ competitiveness against foreign peers.

According to the Ministry of Trade, Industry and Energy on Tuesday, the ministry is currently considering adding the chip packaging sector to the country’s core technology watch list along with the semiconductor and display equipment sectors as part of efforts to prevent technology leaks. A company with the technology designated as the country’s core technology is required to get the government’s approval for its plan to build manufacturing plants overseas or export-related products.

“We are reviewing a plan to designate technologies related to packaging of 16-nano and below dynamic random access memory (DRAM) chips and 64-layer and above NAND flash chips as the country’s core technologies,” a trade ministry official who asked to be unnamed told Maeil Business Newspaper in a phone interview on Tuesday.

The latest move comes after Samsung Electronics Co. announced to ramp up its NAND flash lines in Xian, China and LG Display Co. said it would build a new organic light-emitting diode (OLED) display factory in Guangzhou, China. The government has been negative about such plans, citing possible technology leaks.

But companies in the semiconductor and display industries immediately condemned the government’s latest attempt, saying that the tougher regulations would make it harder for companies in the semiconductor and display industries to set up factories abroad, undermining their competitiveness against its foreign rivals.

Industry experts also argued that chip packaging, which is the last process of chip making to protect a memory chip from damages and corrosion, does not require any advanced technology. Samsung Electronics and SK Hynix Inc. develop and package chips in-house but sometimes rely on small partner companies for packaging.

Regulating the low-tech packaging production would only make hard for small semiconductor makers to compete against Taiwanese rivals because it would weaken their price competitiveness, said an unnamed semiconductor industry official.

The country’s two major memory chip makers Samsung Electronics and SK Hynix are currently operating packaging lines in China.

By Lee Dong-in

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]