As the rivalry between the world’s two largest economies escalates for supremacy in high tech and processors, h South Korea decides to support its own processor industry, which is under pressure from its policies Washington. That’s why he voted yesterday for a bill that would increase tax breaks for large companies investing in the semiconductor sector from 8% to 15%, and for small and medium-sized companies from the current 16% to 25%. This new South Korean policy is expected to significantly stimulate domestic investment in the technology sector, with Korean giants as the main beneficiaries. Samsung Electronics And SC Hynix.

Samsung Electronics and SK Hynix are two of the world’s largest processor manufacturers. Memory, and Samsung, in particular, ranks second in the world in contract manufacturing logic processors by market share. Semiconductor Manufacturing Co. is in the lead. The memory chips whose processors store data are relatively easy to use and are sold in markets such as commodities. logic chip, which run programs and act as the brain of the device, are much more complex and expensive. South Korea, and South Korea’s manufacturing industry in particular, are under pressure as the Biden administration tries to rally support from allies to block China dominate the industry. It is noteworthy that Washington banned American industry from exporting processor equipment to China. Its goal is to prevent China from promoting a wide range of advanced technologies that could improve the world’s second largest economy and displace the US from its position as an undeniably powerful and unique superpower.

South Korean industry has secured a one-year exemption from Washington from restrictions and controls imposed in October on US industry. With these restrictions, Washington is trying to prevent the transfer of processor equipment to its most complex facilities in China. But without renewing the license they issued, it’s doubtful that either Samsung or Hynix will be able to move forward. Two South Korean industries depend on China as their most important market, which is also an industrial center for memory processors.

Thus, the relevant bill was largely supported by both the conservative and progressive camps in the South Korean parliament, as the country’s president made clear his intention to approve it. Since mid-March, South Korean President Yoon Suk-yeol has announced a $422 billion investment package to develop processor manufacturing and electric vehicles. Finally, he mentioned Seoul’s plans to set up data centers.

With this initiative, South Korea hopes to maintain its global leadership in semiconductor technology or even overtake Taiwan as the dominant force in the logic processor industry. The technology sector is the main engine of growth for the South Korean economy, which is heavily dependent on trade. This sector represents about 12% of total exports as of last month. As global demand for semiconductors plummeted, South Korea’s economy contracted in the last quarter of last year, and the current quarter is looking quite challenging as its exports are falling again.