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Korean Semiconductor Companies Supporting Localization Efforts of Small Partners
Through Investment in Small Suppliers
Korean Semiconductor Companies Supporting Localization Efforts of Small Partners
  • By Kim Eun-jin
  • July 9, 2019, 12:08
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Korean semiconductor producers have been active in supporting the localization efforts of their small and medium-sized partner companies.

As the Japanese government tightens restrictions on semiconductor material exports to Korea, there is a growing call for localization of major items. Some experts assert that large Korean semiconductor producers’ lack of investment in the material industry hinders localization of key materials needed to produce semiconductors. However, Korean semiconductor producers have actually been active in supporting the localization efforts of their small and medium-sized partner companies.

A debate has flared up regarding Korea’s slow localization of major materials in the aftermath of Japan’s restrictions on semiconductor material exports. Earlier, the Korean Society on the Advancement of the Korean Semiconductor Industry Structure blamed Korea’s poor material localization on tougher environmental regulations and big Korean chipmakers’ reluctance to give technical support to material companies.

However, due to the semiconductor industry’s sensitivity to technical security, Korean semiconductor makers were partnering with individual companies and supporting them by way of equity investment rather than providing technical support industry-wide, the Korean semiconductor industry explained.


In fact, Samsung Electronics has invested in semiconductor material companies such as Dongjin Semichem and SoulBrain and is pursuing joint technology development with them. The two companies are producing the items regulated by Japan. Dongjin Semichem produces photoresists while SoulBrain supplies etching gas (hydrogen fluoride).

Samsung Electronics held a 4.8 percent stake in each of the two companies as of end-March. Samsung Electronics is investing not only in material companies but in equipment makers such as SEMES, a subsidiary of Samsung Electronics, and Wonik IPS.

“Since material technology constitutes important trade secrets, it is difficult for chipmakers to pursue joint technology development with a large number of companies,” said an official of the Korean semiconductor industry. “Korean semiconductor companies are pursuing technology development with a few partners to prevent technology leaks and shorten the development period.”

SK Group is nurturing the semiconductor material industry through M&As with major material companies and the vertical integration of affiliates. SK Siltron, SKC and SK Materials are expanding the Korean material ecosystem while engaging in various domestic chemical businesses.

In addition, semiconductor companies were trying to localize their materials in indirect ways, considering domestic circumstances such as controversies over inside trading and an invasion into business areas designated for small and mid-sized companies, industry sources said.

"Large companies can prevent technology leaks and secure stable suppliers through their subsidiaries, but regulations on preventing inside trading among others are burdens to them," another semiconductor industry official said