Renault Samsung Motors Corp., the South Korean unit of Renault S.A., said that it has temporarily suspended its Busan plant due to lack of semiconductor parts.
Renault Samsung Motors is currently making efforts to produce and export the XM3, a small sports utility vehicle (SUV). In June, Intel Corp. Chief Executive Officer Pat Gelsinger has predicted that there will be a shortage of semiconductors that’s hurting a whole lot of industries- from automotive to consumer electronics.
Recently, Kim Ki-nam, Vice Chairman and Head of Device Solutions at Samsung had said: “The entire semiconductor industry is facing a watershed moment and now is the time to chart out a plan for long-term strategy and investment.”
Tackling chip shortages
Globally, there is a shortage of semiconductors as demand has shot up exponentially in the aftermath of the COVID-19 pandemic, with businesses across the world adopting digital. However, the industry has not been able to keep pace with this increase in demand, as chip-making factories were impacted by lockdowns and restrictions.
In line with this, South Korea’s government plans to offer more tax incentives for chipmakers and revise laws.
According to the Ministry of Trade, Industry and Energy, a Bill on expanded tax incentives and eased regulations, will be submitted to the parliament by September, according to ministry ministry officials. The proposed Bill has tax deduction ratio of 40 per cent, an increase from the previous 30 per cent tax, to encourage spending on chip making.
South Korea has laid out its vision to become a global powerhouse in both memory and non-memory chips. While it is one of the leading countries in terms of memory chips, it has been lagging behind peers in the non-memory segment.
Semiconductors accounted for some 20 per cent of the country’s exports. Tech giants Samsung and SK Hynix, the semiconductor manufacturing arm of national telco SK Telecom, will be committing $151 billion (170 trillion Korean won) and $97 billion (109 trillion Korean won) respectively to expand their existing chip making facilities.
Similarly, NYSE-listed MagnaChip Semiconductor Corp. plans to spend more than 500 billion won ($441 million) from the $1.4 billion buyout fund on R&D and facility upgrade in Korea by 2025.
South Korea aims to double its annual outbound shipments of chips to reach a whopping $200 billion in 2030 from $99.2 billion in 2020.