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Special Committee Formed to Review LG Display’s OLED Plant in China
Stronger Restriction Expected
Special Committee Formed to Review LG Display’s OLED Plant in China
  • By lsh
  • September 20, 2017, 02:00
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Baek Woon-kyu, Minister of Trade, Industry & Energy, met with semiconductor and display sector experts in Seoul on September 18.
Baek Woon-kyu, Minister of Trade, Industry & Energy, met with semiconductor and display sector experts in Seoul on September 18.

 

The Ministry of Trade, Industry & Energy of South Korea organized a special committee in order to discuss whether to allow LG Display to build an OLED manufacturing plant in Guangzhou, China. At present, OLED is one of the national key technologies of South Korea. For the technology to be exported in any form, an approval must be obtained from the government first in compliance with the Act on Prevention of Divulgence and Protection of Industrial Technology.

The ministry has worked with another committee including 14 electronics and electrical industry experts in discussing similar matters. However, it formed the six-person special committee this time after Minister Baek Woon-kyu mentioned that the previous one was short of display experts.

According to some industry insiders, the formation of the special committee is to block LG Display from entering the Chinese market in that the special committee has no precedent in South Korea. LG Display submitted its application to do so two months ago, but the 14 experts had their first meeting regarding the issue as recently as early this month. The special committee has yet to have its first meeting for technology evaluation.

In principle, the government has to complete the evaluation process within 45 days from the date of application. The ministry explained that the progress of the process related to LG Display is not particularly slower than in the past and the government’s role is limited with private-sector members accounting for about 90% of the committee.

Still, insiders are saying that the government is procrastinating. “There are many procedures even after the technology evaluation, and the ministry is kicking the can down the road while being well aware of the importance of a timely investment decision,” one of them commented, adding, “It seems that this has to do with the political tension between South Korea and China in the wake of THAAD deployment in the former.” He went on to say the other factors include the Moon Jae-in government’s policy for job creation and regional economic development based on the maximization of domestic production.

In the meantime, concerns are rising over the possibility of the same situation in the semiconductor sector. DRAM and NAND flash memory constitute South Korea’s key national technologies, on which the government’s R&D expenditures have been spent, like OLED display. Besides, the government approval is required each time microfabrication technology is upgraded when it comes to semiconductors.

SK Hynix recently said that it would expand its clean room facilities in Wuxi, China by investing one trillion won until April 2019. Samsung Electronics also announced that it would build another 3D NAND flash memory plant in Xi’an by investing US$7 billion .

Currently, a simple notification, not an approval from the government, is required for the export of 3D NAND flash technology with the government having no share in the development of the technology. Samsung Electronics built its first 3D NAND flash memory plant in Xi’an without the approval as well. However, the government can change its way of interpretation at any time in that semiconductors incorporate a wide variety of techniques and technologies. This means Samsung Electronics can face the same situation as LG Display at any time. The same applies to SK Hynix, too.

“With the South Korean government’s stance on overseas investment changing, the progress of the case of LG Display has a lot of significance,” said an industry source, adding, “Both Samsung Electronics and SK Hynix may have to alter their investment strategy depending on how it goes on.”