Gov't to boost non-memory chip biz

Finance ministry not considering revising down growth forecast

The government will draw up measures to help Samsung Electronics, SK hynix, and small- and medium-sized enterprises (SME) boost their non-memory chip businesses, Finance Minister Hong Namki said Monday.

Korean companies are the top manufacturers of memory semiconductors, but their competitiveness in non-memory chips lags far behind those in the United States and Taiwan.

It is important for local companies to gain an edge in non-memory chips, which are the "core strategic parts" powering Fourth Industrial Revolution-related technologies such as artificial intelligence, autonomous vehicles, robots and smart cities.

"We are No. 1 in memory chips, but Korean companies' worldwide market share in non-memory chips is only 3 percent," Hong said at an economy-related meeting in Seoul.

The ministry's support complements Samsung Electronics' plan to invest 133 trillion won ($116 billion) in non-memory chips by 2030 to compete with Intel, Qualcomm and Taiwan-based TSMC. SK hynix plans to invest 120 trillion won in setting up a research and manufacturing base in Yongin, Gyeonggi Province.

Above all, they all want to reduce their reliance on volatile memory chips, which have accounted for over 20 percent of the country's total annual exports.

This comes amid Samsung's first-quarter earnings shock, and the country's 0.3 percent quarter-on quarter growth contraction due to weakening exports, especially of memory chips.

Given the global market size for non-memory chips, which is nearly twice that of memory chips, analysts say the diversification will add value to the economy.

"Strengthening non-memory chips would be a turning point for the industry," said Kim Dongwon, an analyst at KB Securities.

Hong said the conglomerates and SMEs' forays into the non-memory chip sector will help "stabilize" exports as it is much less volatile than the memory chip field.

"We will come up with measures next month or in June, after gathering industry opinions," he said.

The finance minister added that despite the economic contraction in the first quarter, his ministry is "not considering" lowering its 2019 growth projection of 2.6 percent at the moment.

But the ministry will seek to deploy its 6.7 trillion won supplementary budget promptly to help revitalize the economy beset by falling exports and facility investment.

Exports fell 2.6 percent in the first quarter and the country's outbound shipments have dropped for four consecutive months. Also, facility investments declined 10.8 percent in the same period, the sharpest fall in 21 years.

The ministry will also deploy countermeasures to stabilize the value of the Korean won against the dollar.

"The currency has been facing extreme volatility ahead of the U.S. Federal Open Market Committee on May 1, and because of the U.S.-China trade conflict," Hong noted.