The chairman of South Korea’s state-run Korea Development Bank (KDB), Kang Seok-hoon, emphasized the importance of semiconductor technology in both national security and economic competitiveness in a recent interview.

“Semiconductor technology is so important to the national economy that it has become a primary factor in the ongoing conflict between the United States and China,” Kang said during an interview with Maeil Business Newspaper on Thursday. “If we do not support and grow our semiconductor industry, we will be left behind in the global competition as semiconductor technology becomes increasingly prevalent in various sectors such as defense and space.”

It is critically important for Korea to actively provides subsidies to companies investing in semiconductor technology, taking a leaf from countries such as the United States and Japan which offer substantial subsidies to attract these types of companies. Kang also emphasized that it will be extremely challenging for the Korean semiconductor industry to catch up once it falls behind significantly, with time of the essence.

He also agreed with Maeil Business Newspaper’s suggestion that the Korean government should promptly provide financial support to relevant companies via policy financial institutions as the country currently does not have a subsidy system in place.

He highlighted the importance of institutions like KDB swiftly executing low-interest loans and investments as the fastest means to support the semiconductor industry. Although there have been decade-long calls for an increase in KDB’s statutory capital limit, which has been capped at 30 trillion won ($21.73 billion), to support the country’s semiconductor industry amid an intensifying global subsidy competition, KDB has already exhausted 26 trillion won.

“KDB‘s statutory capital limit remains the same as it was 10 years ago at 30 trillion won, even as the Korean economy has grown tremendously,” Kang said. “ It is high time to increase the capital limit in response to the current global subsidy war within the semiconductor industry.”

Increasing KDB’s capital limit requires an amendment in the Korea Development Bank Act.

Although Korean chipmakers Samsung Electronics Co. and SK hynix Inc. are recognized as global leaders in the memory sector, they are lagging behind in the non-memory sector compared to U.S.-based Intel Corp. and Taiwan’s Taiwan Semiconductor Manufacturing Co. (TSMC).

“Korean companies are struggling to compete in the emerging field of artificial intelligence (AI) semiconductors within the non-memory sector,” Kang said. “Without significant investments, Korea could fail to establish a robust semiconductor ecosystem.”

Amid reports that Tokyo is inducing Korean semiconductor companies to set up production facilities in Japan, Kang said it was a clear sign of the intensifying global competition and the urgent need for Korea to take immediate action.

By Park In-hye and Yoon Yeon-hae

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