{"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

\"\"

South Korean President Yoon Suk-yeol attends the Future Investment Initiative forum in Riyadh, Oct. 24, 2023 | Image: ROK Presidential Office<\/a><\/em><\/p><\/div>\n

NATIONAL ADVANCED STRATEGIC TECHNOLOGIES<\/b><\/p>\n

National Advanced Strategic Technologies <\/span>encompasses<\/span><\/a> 17 technologies spread across four sectors: semiconductors, secondary batteries, displays and biotechnology. This classification comes with considerable government backing.<\/span><\/p>\n

Domestic firms under this umbrella receive assistance for R&D and workforce training. Further, to attract foreign investment, foreign firms that channel funds into these technologies are eligible for cash subsidies, covering <\/span>up to half of their investment<\/span><\/a>. Additionally, cities recognized as hubs for these technologies gain additional benefits, with seven cities having earned this distinction.<\/span><\/p>\n

The National Advanced Strategic Technology Committee \u2014 under the purview of the Prime Minister\u2019s office, relevant governmental ministries and commercial stakeholders \u2014 <\/span>oversees<\/span><\/a> this list.<\/span><\/p>\n

However, these perks come with regulatory strings attached. The introduction of the <\/span>Special Measures Act on Strengthening and Protecting Competitiveness of National High-Tech Strategic Industry<\/span><\/a> last August imposes certain mandates. Companies must seek clearance from MOTIE to export these technologies or engage in mergers and acquisitions involving foreign firms. Additionally, these firms must fortify their intellectual property protection measures, particularly concerning employees who handle sensitive data.\u00a0<\/span><\/p>\n

NATIONAL CORE TECHNOLOGIES<\/b><\/p>\n

Since its establishment in 2007 through the <\/span>Act on Prevention of Divulgence And Protection of Industrial Technology<\/span><\/a>, the term National Core Technologies <\/span>signifies<\/span><\/a> 75 distinct technologies spread across 13 fields. These technologies hold pivotal roles in domestic and global markets and have promising growth trajectories.<\/span><\/p>\n

A key driver behind this classification is safeguarding against the unauthorized dissemination of trade secrets. As a result, companies aiming to export these technologies require MOTIE\u2019s approval. Any breach, especially leaking these technologies abroad, can lead to severe penalties, including up to 15 years of imprisonment.<\/span><\/p>\n

Recognizing the dynamic nature of these sectors, the government recently <\/span>eliminated<\/span><\/a> various sunset clauses for inclusion on this list. Instead, it has mandated MOTIE to conduct annual assessments of each technology. Given the crucial commercial value these technologies hold for Korea, they\u2019ve been at the center of costly economic espionage attempts, <\/span>draining<\/span><\/a> Korea of trillions of won.<\/span><\/p>\n

LOOKING AHEAD<\/b><\/p>\n

The classifications of South Korea\u2019s technology sectors highlight the nation\u2019s efforts to manage its technological assets. These categories, while sometimes overlapping, indicate a structured attempt to identify and protect essential technologies. The emphasis on R&D, IP protection and specific support measures demonstrates South Korea\u2019s attempts to navigate the challenges of the global tech landscape.<\/span><\/p>\n

For those interested in South Korea\u2019s tech direction, keeping an eye on these classifications can provide a clearer picture of the country\u2019s strategic intentions and potential impacts on the broader tech industry.<\/span><\/p>\n

Edited by John Lee<\/span><\/i><\/p>\n

Business & Economy<\/span><\/a>Domestic Politics<\/span><\/a>Technology & Cyber<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"

South Korea\u2019s semiconductor industry made headlines 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. 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