20090728

Korea Semicon United v. Chaiwan Reunited

Recently LG and Samsung have been enjoying spectacular sales overseas as the Korean Won slumped against other currencies. But Wisely, Korea Inc. has also been massively investing in R&D during the downturn.

The Government wants to go even faster and seize the opportunity to diminish dependence on foreign components key to the IT sector. Yesterday, the Ministry of Knowledge Economy announced that it would contribute to 51% of a KRW 13.3 bn (USD 10.7 M) project in semiconductors which, down the line, may turn KRW 300 bn yearly imports into KRW 300 bn yearly exports*... and whatever the outcome, will result in the creation of new jobs at a most crucial moment.

More than money, the Government seems to be providing a new R&D ecosystem with a set of fair play rules : the most spectacular dimension of the project is the unprecedented alliance of IT rivals Samsung Electronics and LG Electronics on "global digital TV receiver chips", LG developping the core chips and Samsung testing and producing them. Burying the hatchet in this most strategic field could speed up innovation and boost the tandem's overall global sales for many key devices.

The State will also finance 58% (KRW 2.8 bn / 4.8 bn) of a project where SK Telecom shall develop a wireless connectivity SoC for smartphones (WiFi, GPS...) with local chipmakers and system-on-chip expert Xronet.

Korea cannot afford to waste time and energy as China is de facto absorbing Taiwan's industry. They can't compete in volumes in the long term, but need the capacity in order to remain one step ahead in innovation.

This may not sound disruptive, but it's a giant leap since the times when Korea invested in a company called Qualcomm...

Bringing speed and decisiveness, now that's good politics.


* see "
Samsung, LG, SK Telecom to develop advanced semiconductors" (20090727 Yonhap)



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