{"id":2202607,"date":"2023-10-31T17:00:22","date_gmt":"2023-10-31T08:00:22","guid":{"rendered":"https:\/\/koreapro.org\/?p=2202607"},"modified":"2024-04-08T20:58:27","modified_gmt":"2024-04-08T11:58:27","slug":"decoding-south-koreas-tech-classifications-strategies-and-stakes","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2023\/10\/decoding-south-koreas-tech-classifications-strategies-and-stakes\/","title":{"rendered":"Decoding South Korea\u2019s tech classifications: Strategies and stakes"},"content":{"rendered":"
South Korea\u2019s semiconductor industry made <\/span>headlines<\/span><\/a> earlier this year when a top Samsung executive was accused of using stolen trade secrets to establish a semiconductor manufacturing plant in China, which mirrored Samsung\u2019s designs.<\/span><\/p>\n The story continued to develop last week as South Korean prosecutors added <\/span>10 more names<\/span><\/a> to the list of those implicated in the alleged scheme. Among the stolen intel were designs classified as \u201cNational Core Technologies,\u201d a term from a set of four that the Yoon Suk-yeol administration uses to identify technologies vital for economic and national security.<\/span><\/p>\n Grasping these tech classifications is critical to understanding South Korea\u2019s economic strategies. The terminologies encompass Core Strategic Technologies, National Strategic Technologies, National Advanced Strategic Technologies and National Core Technologies.<\/span><\/p>\n Their similar names are not a coincidence but hint at coordination challenges between South Korea\u2019s ministries, leading to overlapping and sometimes confusing terms.<\/span><\/p>\n CORE STRATEGIC TECHNOLOGIES<\/b><\/p>\n Core Strategic Technologies encompass essential components, materials and equipment used to produce advanced tech items such as semiconductors and displays. Examples include fluorine compounds for semiconductor etching and equipment for optimizing ion movement in batteries. The Ministry of Trade, Industry and Energy (MOTIE) <\/span>maintains this list<\/span><\/a>, which comprises 150 items across seven fields.<\/span><\/p>\n This list emerged as a response to supply chain vulnerabilities, highlighted by events like the 2021 <\/span>urea shortage<\/span><\/a>. By categorizing critical technologies, it aims to ensure a more secure supply chain for South Korea. Companies specializing in these technologies can be <\/span>designated<\/span><\/a> as \u201cleading companies,\u201d granting them access to benefits such as favorable R&D loans and support for overseas expansion.<\/span><\/p>\n Currently, <\/span>66 such companies<\/span><\/a>, including lesser-known yet vital players like Raon Tech Corp and Nextchip, have this designation. To further support these companies, especially small and medium-sized enterprises, MOTIE <\/span>introduced<\/span><\/a> a $18.5 million (25 billion won) investment package last July.<\/span><\/p>\n In a changing global geopolitical context, Seoul\u2019s commitment to supply chain security becomes evident through initiatives like this. For investors, the implication is clear: companies on this list are integral to Korea\u2019s tech infrastructure and are poised to benefit from ongoing governmental backing.<\/span><\/p>\n NATIONAL STRATEGIC TECHNOLOGIES<\/b><\/p>\n The National Strategic Technologies classification <\/span>outlines<\/span><\/a> 12 areas of focus, further detailed into 50 \u201cdetailed key technologies.\u201d A notable inclusion is small modular reactor technologies within the nuclear power sector.<\/span><\/p>\n Overseen by the Ministry of Science and ICT, this list essentially <\/span>charts<\/span><\/a> Korea\u2019s investment and R&D trajectory for the forthcoming decade. With government support in the billions of dollars, the <\/span>selection<\/span><\/a> of these technologies pivots on economic and national security imperatives.<\/span><\/p>\n Each identified technology is accompanied by a targeted objective for the next decade. To illustrate, the ambition for secondary batteries is a jump in exports from $7.5 billion in 2021 to a projected $20 billion by 2030. In the aerospace domain, the aspiration is to deploy a lunar landing vehicle using a homegrown rocket by 2031. Meanwhile, in the AI sector, the vision is to climb the ranks to third place on the Stanford University AI index by 2030.<\/span><\/p>\n However, these aspirations may face hurdles as the Ministry of Economy and Finance (MOEF) has signaled a <\/span>budget cut of 19%<\/span><\/a> for the upcoming year.<\/span><\/p>\n The term National Strategic Technologies takes on a different meaning in the context of Korean tax regulations. Under tax law, this term can be applied to <\/span>seven sectors<\/span><\/a>, which partially coincide with the previously mentioned 12.<\/span><\/p>\n Companies recognized within these sectors are eligible for tax breaks stipulated by the <\/span>Act on Restriction of Special Taxation<\/span><\/a>. While the MOEF has the authority to determine these sectors and fix tax credit percentages, there have been recent <\/span>disagreements<\/span><\/a> regarding its preferential treatment of the semiconductor industry.<\/span><\/p>\n