[THE INVESTOR] The Korean government is renewing its commitment to the display and semiconductor sectors where Chinese players are fast catching up with their Korean rivals.

Korea has reduced related government budgets as Korean companies such as Samsung Electronics, SK hynix and LG Display became top players in the fields. 

During the years, Chinese companies have grown rapidly largely boosted by their government’s full support. The government is estimated to invest about 1 trillion yuan (US$150 million) in semiconductor alone for the next 10 years.

“The Korean government has been cautious about supporting R&D activities in the semiconductor industry that is packed with big chaebol firms,” said Joo Dae-young, a researcher at Korea Institute for Industrial Economics and Trade.

“But with related research projects being reduced, researchers do not want to study on the field, leading to a lack of talent overall.”

In order to support futuristic, value-added technologies, the Korean government has decided to resume or increase investments in semiconductor and display sectors.

The Ministry of Trade, Industry and Energy has secured an additional 1.1 billion won to pour into next-generation display panels such as transparent display this year.

Next year, the ministry also plans to increase the budget for system semiconductor that is increasingly used for Internet of Things and artificial intelligence technologies.

Local chipmakers, led by Samsung and SK, are also mulling a new 200 billion won (US$174.51 million) semiconductor fund to nurture system semiconductor firms and seek merger and acquisition opportunities.

Despite its leadership in memory chips, Korea’s market share in the soaring system semiconductor market stands at a tiny 4.3 percent.

By Lee Ji-yoon (jylee@heraldcorp.com)