Japanese and SK take measures to support local chip manufacturers
The Japanese government is proposing a new plan as part of its ongoing efforts to revive its chip industry, while the South Korean government is considering developing its own domestic “Chip Act” to protect domestic chip manufacturers from the potential economic impact of high import tariffs threatened by US President elect Donald Trump.
These two East Asian countries have been expanding their chip production capacity as the current economic and geopolitical tensions between China and the United States threaten the stability of the global semiconductor supply chain.
In the past three years, Japan has injected about 4 trillion yen (25.49 billion US dollars) into this neglected industry, while South Korea allocated 26 trillion Korean won (19 billion US dollars) in government funds in May to promote the growth of local industries.
With the use of complex microprocessors in today’s smart phones, advanced data centers, robots and autonomous vehicle, the battle for the supremacy of chip manufacturing is beginning. Especially, these high-performance processors need to power servers capable of handling the ever-increasing workload of artificial intelligence.
A $65 billion plan
Japanese Prime Minister Shigeru Ishiba has announced a 10 trillion yen ($65 billion) plan to support large-scale production of next-generation chips, particularly artificial intelligence chips.
According to Reuters’ paywall apps, the new plan also requires a total investment of 50 trillion yen ($320 billion) from both the public and private sectors in the chip industry over the next decade.
The plan is part of a comprehensive economic package to be finalized in November, which will be funded through subsidies and other fiscal incentives.
The report states that Rapidus, a chip foundry supported by the government, will be one of the potential beneficiaries of the latest plan to revitalize the country’s semiconductor industry.
Rapidus was founded in 2022 and is currently collaborating with IBM and Belgium based research firm Imec to mass produce cutting-edge chips on Hokkaido Island. Using IBM’s technology, Rapidus hopes to begin trial production of 2-nanometer chips in April 2025 and mass production in 2027.
The Japanese government expects its latest plan to promote domestic chip manufacturing to have an economic impact of approximately 160 trillion yen ($1 trillion).
Protecting Korean chip manufacturers
According to Reuters, the South Korean government has announced a bill that will protect local chip manufacturers such as Samsung and SK Hynix from the economic impact of potential tariffs imposed by the incoming Trump administration on imported products.
Last week, South Korean President Yoon Suk yeol warned that Chinese chip manufacturers may significantly lower export prices due to high tariffs on imported Chinese products, thereby competing with South Korean companies in overseas markets.
The semiconductor industry plays a crucial role in the South Korean economy, with chips accounting for 16% of South Korea’s total exports last year.
Reuters quoted Hyundai analyst Greg Noh as saying that the bill is likely to face a tough battle to gain approval from the liberal opposition party, which holds a majority in parliament.
One crux of the bill lies in one of its provisions, which will exempt employees engaged in research and development work from the national limit of 52 hours per week, allowing them to work longer hours.
According to reports, Samsung’s labor union opposed this measure last month, stating that Samsung attempted to attribute “business failure” to the law.