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S. Korea eyes chip alliance with Netherlands

Upcoming chip deal with Netherlands could help Seoul's arms exports: Yoon

Dec. 7, 2023 - 17:44 By Son Ji-hyoung
President Yoon Suk Yeol (third from left) attends a conference to discuss the defense industry export strategies in Pangyo, a tech hub in southern Gyeonggi Province, on Thursday. (Yonhap)

President Yoon Suk Yeol's upcoming state visit to the Netherlands will lay the groundwork for the new chip alliance with the country, a semiconductor industry powerhouse home to the world's sole extreme ultraviolet lithography equipment supplier, to enable the production of more sophisticated microchips, according to the presidential office, Thursday.

Yoon's state visit to the Netherlands, upon the invitation of King Willem-Alexander from Monday to Thursday, could "magnify bilateral complementarity in a semiconductor value chain by incorporating Dutch cutting-edge chipmaking tools with South Korea's chip production prowess," said Kim Tae-hyo, first deputy chief of the presidential National Security Office, in a briefing at Yoon's office in Seoul, Thursday.

Kim added that Yoon is scheduled to visit the headquarters of ASML, a photolithography machine manufacturer for semiconductor production, and meet its chief, Peter Wennink, on Tuesday. Yoon will be the first head of state to inspect ASML's semiconductor cleanroom, a facility designed to control the chipmaking environment.

With the visit, Yoon will seek to create a bilateral consultative body and explore joint business opportunities, while focusing on ways to establish a chip alliance involving the public sector, the private sector and academic circles of the two countries, Kim added.

Accompanying Yoon's visit to ASML headquarters will be Willem-Alexander, Samsung Electronics Executive Chairman Lee Jae-yong, SK Chairman Chey Tae-won, who controls memory chip manufacturer SK hynix and NAND Flash maker Solidigm. Samsung and SK hynix took up a combined 70 percent of the market share in DRAM revenue in the first half, according to market tracker TrendForce.

The visit will give the Yoon administration "a sense of inspiration as South Korea is currently building semiconductor clusters," Kim said.

Yoon is the first South Korean leader to go on a state visit to the Netherlands.

Yoon said earlier Thursday that South Korea's upcoming semiconductor chip deal with the Netherlands will potentially bolster Seoul's arms exports, at a conference to discuss export strategies of Korea's defense industry in Seongnam, Gyeonggi Province.

South Korea's closer cooperation with the Netherlands could enhance South Korea's arms industry capabilities, allowing its arms technology to advance to the next level, Yoon told some 80 audience members at Hanwha Aerospace Research and Development Center in Pangyo, a tech hub south of Seoul.

"Next week, I'll make a state visit to the Netherlands and discuss ways to bolster the bilateral chip alliance," Yoon said. "A closer chip cooperation with the Netherlands will not only greatly contribute to our arms industry capabilities, but also open up new opportunities for arms exports."

Kim Tae-hyo, first deputy chief of the presidential National Security Office, speaks during a news conference on Thursday at the presidential office in Seoul. (Yonhap)

This aligns with South Korea's efforts to stabilize the critical chip supply for its weapon system.

The Defense Acquisition Program Administration, South Korea's arms development and procurement authorities, established a new body in October to set up a new strategic blueprint to address the high reliance on chip imports in the domestic defense industry and discover use cases of artificial intelligence to develop next-generation weapons.

The Yoon administration has made South Korea's arms exports one of the top priorities in his policy drive. He has designated the defense industry as a new economic growth driver in the country, which is technically still at war with North Korea.

Yoon in August 2022 told reporters in his 100th day in office that he aims to have South Korea become the fourth-largest arms exporter after the United States, Russia and France.

Through 2022, defense industry-related exports surged twofold on-year to hit $17.3 billion, an all-time high annual figure, according to data from the Defense Ministry. South Korea has also been exploring more export destinations, such as Jordan, Bahrain, Greece and Kenya, bringing the number of counterparts for the arms exports-related memorandum of understanding to 48 in 2022, up from 33 in 2016.

South Korea's Industry Ministry set a target for the 2023 annual arms exports to $17 billion in January. It has exported items ranging from a mid-range surface-to-air missile system to a battle tank, a self-propelled howitzer, a multiple-launch rocket system and a light combat aircraft.

Most recently, delegations from 57 countries attended the Seoul International Aerospace and Defense Exhibition in October.

With the expansion of arms exports in sight, now is the right time for South Korea's military items to leap forward through the industry's adoption of new technologies.

"The unperturbed supply chain operation in terms of semiconductor chips and other types of materials, components and equipment is crucial for the next step forward in the defense industry," Yoon said "Our defense industry should work swiftly to develop cutting-edge technologies for AI technology, crewed and uncrewed teaming, space and robotics."