The South Korean government on Tuesday vowed to support the advanced chip industry, highlighting the rise of new technologies, including artificial intelligence.

At a gathering of fabless companies hosted by the Ministry of Trade, Industry and Energy, Vice Trade Minister Chang Young-jin highlighted the importance of advanced semiconductors and its growth potential.

“The semiconductor industry has been No. 1 in exports for 10 consecutive years, and is the pillar of our economy and industries. But it is now in need of support to boost export and investment, facing a difficult market situation,” Chang told the major industry companies and associations, and researchers in attendance.

The vice trade minister also pointed to the boom in generative AI prompted by chatbots such as ChatGPT, and said the government will provide support for the advanced chip industry to gain a competitive edge in the market.

“The Industry Ministry will concentrate all its policymaking capacity for expansion of export and investment and closely support companies this year, and I ask for the industry to also respond by actively pioneering new markets and making bold investments,” Chang said.

Chip companies have forecast a decline in overall exports and profitability in the first half of this year due to the ongoing slump in demand amid the economic downturn, and as clients seek to consume their own inventories.

But they expect the market to slowly recover in the second half of this year, with the demand for high capacity, advanced chips predicted to grow and relieve the oversupply situation.

At the same time, government support is necessary for chips for servers and AI as next-generation sectors, involving advanced technologies such as autonomous driving, are expected to grow, they said.

The government has said it will establish a 300 trillion won ($224 billion) advanced logic chip cluster to strengthen the industry ecosystem encompassing the entire production process of design, manufacturing and post-processing.

To foster next-generation chips for AI, automotive and electricity sectors, the government also said it will promote tech development projects worth 3.2 trillion won.

At the meeting, the vice minister also vowed to work closely with the US, touching on the latest agreement Seoul forged with Washington.

Following the recent summit between South Korean President Yoon Suk Yeol and US President Joe Biden, the two countries issued a joint statement to announce their cooperation on research and development in three advanced chip and semiconductor fields -- next generation chips, advanced packaging technology and advanced equipment -- and to active personnel exchanges.

Chang also reiterated that the government will do its best to minimize uncertainties caused by the US CHIPS Act for Korean companies in their business management and investment.

To facilitate more effective policymaking, the ministry has carried out some 10 meetings with major industries, including display, steel, battery and cars, to better communicate with stakeholders and to monitor exports and investment, the ministry said.