[Reporter’s Notebook] The Road Ahead Still Long for So-Bu-Jang

[Asia Economy Reporter Moon Chaeseok] "The dependence on Japanese imports for extreme ultraviolet (EUV) photoresists remains high. Domestic companies are substituting the display (OLED) material polyimide fluoride by applying ultra-thin tempered glass (UTG) to new products."

This is a passage from the 'Materials, Parts, and Equipment Industry Policy Analysis' report published by the National Assembly Budget Office on the 24th. The office evaluated the government's materials-parts-equipment (SoBuJang) policy as "making efforts but still having a long way to go."

In fact, the report shows that in the one year after Japan's export restrictions, imports of two out of the three major items (EUV photoresist, polyimide fluoride, and hydrogen fluoride) actually increased.

Comparing imports before (July 2018 to June last year) and after the restrictions (July last year to June this year), EUV photoresist imports rose from $311.27 million (1,018 tons) to $353.60 million (1,030 tons), and polyimide fluoride imports increased from $24.83 million (204 tons) to $32.60 million (249 tons). This indicates the high technological barriers of SoBuJang items.

South Korea has invested 10.102 trillion won, accounting for 87% of the total SoBuJang support project budget over 20 years from 2001 to this year, in technology development. However, the technological level of related small and medium-sized enterprises remains at 85.3% of the United States, 89.3% of Japan, and 80.5% of Germany.

Meanwhile, China's catching-up speed is fast. The gap in general technology competitiveness for materials and parts with China narrowed from 17% in 2012 to 7% in 2018, and the gap in advanced technology decreased from 15.9% to 6.6%, respectively.

The domestic SoBuJang market is entrenched with small and micro enterprises. As a result, while the research and development success rate (93.4% from 2013 to 2018) is high, the commercialization success rate (49.8%) falls far short. It is also difficult to supply stably and continuously to world-leading demand companies.

The government has increased the SoBuJang-related budget and strengthened connections with demand companies since last year. However, this is insufficient.

The contribution of companies to the growth of domestic core component localization rates should be quantified, and bold incentives must be provided. Along with long-term investment in basic science, an environment should be created where capable doctoral-level personnel can build careers in small and medium enterprises.