Choi Tae-won: "Semiconductor Rollercoaster Will Continue... At a Crossroads of 'Capital Expenditure'"

Choi Tae-won, Chairman of SK Group and Chairman of the Korea Chamber of Commerce and Industry (KCCI), predicted that the semiconductor market, which has entered a boom phase this year, may face a downturn again someday, stating that "the roller coaster will continue going forward." He further explained that the background to this was the recent issue faced by the industry regarding the need to expand supply lines due to the massive subsidies being provided by advanced countries, and that increasing 'capital expenditure (CapEx)' has become one of the challenges amid this situation.

Chairman Chey Tae-won of SK Group and Chairman of the Korea Chamber of Commerce and Industry is answering questions from the press at the reappointment press conference held on the 2nd at Fraser Place Namdaemun. Photo by Korea Chamber of Commerce and Industry

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According to the business community on the 6th, Chairman Choi responded this way when asked about the current status of the Korean semiconductor market at a press conference held on the 2nd at Fraser Place Namdaemun, where he was reappointed as KCCI chairman.

Chairman Choi reflected, "Last year, the business conditions were so bad that there is a kind of 'rebound effect' making this year look relatively better. A few years ago, due to the spread of COVID-19, demand rose more than it should have, and as COVID-19 restrictions were lifted, the excess demand disappeared last year. In fact, the economic impact was quite significant, causing consumption to slow down accordingly. Consequently, demand for semiconductors also declined."

He continued, "I believe this kind of roller coaster will continue. Although the business conditions have improved this year, how long this improvement will last is uncertain. I think it will not last that long," he emphasized.

He also said, "Semiconductor investment must continue, but miniaturization of semiconductors has become quite difficult. To meet the demand for the miniaturization process, supply must be increased, which means more production lines need to be built. This is a difficult problem that cannot be solved by technology alone but must be addressed through CapEx," he said.

Chairman Chey Tae-won of SK Group and Chairman of the Korea Chamber of Commerce and Industry is answering questions from the press at the reappointment press conference held on the 2nd at Fraser Place Namdaemun. Photo by Korea Chamber of Commerce and Industry

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Chairman Choi analyzed that this trend has led advanced countries to offer semiconductor subsidies. He said, "Companies do not want to invest all the CapEx problems with their own money, and meanwhile, many countries around the world want to bring semiconductor production to their own countries, which has led to a lot of talk about subsidies. Our country may also face the challenge of how to solve the problem of high CapEx costs. The semiconductor industry will tend to flow toward areas where business is good or risks can be shared," he said. Based on this, he pointed out, "One of the remaining challenges in the industry is how much more CapEx will be invested and how well it will be managed going forward."

When asked whether subsidies should be seen as incentives to attract companies, he replied, "It varies by country," adding, "There are reasons why subsidy amounts are large, such as lack of systems, high labor costs, or other different circumstances." He added, "Our country also has a well-established system."

SK Group Chairman Chey Tae-won visited Silicon Valley, USA, on the 24th of last month (local time) and met with Jensen Huang, CEO of the American semiconductor company Nvidia, for a conversation. On the 25th of last month, Chairman Chey shared a photo taken with CEO Huang on his Instagram. Photo by Chey Tae-won Instagram capture [Image source=Yonhap News]

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Regarding his meeting with Jensen Huang, CEO of NVIDIA, held in Silicon Valley, USA, on the 24th of last month, he explained, "We met, greeted each other, had a meal, and as we were leaving, he signed an e-book of his company and gave it to me, so I posted it on my social media account. That's all." Chairman Choi described Jensen Huang as "someone I have known for a long time," and added, "If you ask what else we talked about, it was something like urging us to speed up our research and development (R&D) so that their products can be released faster."

Chairman Choi also candidly shared his thoughts on domestic and international situations expected to have considerable influence on the business community. Regarding the 22nd National Assembly newly formed through the general election in April, he said, "Since it was originally a 'minority government with opposition majority,' I don't expect significant changes," and emphasized, "Our business community hopes that, given the many low-growth issues currently, it is necessary to seek new paths." He added, "If we continue with the past policies, can South Korea really be okay? This is a question society needs to consider. If a new approach is needed, I think the National Assembly, government, and civil society should accept it well and try new methodologies."

Regarding the U.S. presidential election to be held in November, he said, "It is misleading to say the election is not important, but I don't think the election can completely shake the foundation of the relationship between the U.S. and Korea." Chairman Choi said, "I believe there are parts that can and cannot be changed regardless of who becomes president, and even if the president has the will, it is not easy to change laws if Congress does not follow. Since procedures and discussions proceed while also incorporating opposing opinions, it will not be a situation of 'a big crisis'."

On being reappointed as KCCI chairman, he said, "I hope to focus more on what I can do and achieve visible results this year." He added, "The work remains the same. Communication and the Economic Round Table (ERT) are central. The first term was somewhat of a test, but this year I will focus more on making the business community the way the public wants it to be and strive to make it a business community that contributes greatly to society," expressing his aspirations.

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