South Korean Government is planning to stop South Korean semiconductor and display manufacturers from building additional facilities in China in order to protect its competitive edge in state-of-the-art technologies.

Currently, companies including Samsung Electronics, SK Hynix, and LG Display are seeking to build additional facilities in China in order to increase their production output, but the South Korean government's policy could be a serious setback.

ETNews.com reports that the South Korean Minister of Trade Baek Woon-kyu said that it would be better for South Korean semiconductor and display manufacturers to rethink about going into Chinese market.

Baek recommended Samsung Electronics to rethink about building additional facilities in Xi'an in a private meeting.

Last month, Samsung announced a $6.92 billion investment plan into a second 3D NAND flash memory facility in Xi'an, Shanxi. The company has also signed a Memorandum of Understanding with Shanxi.

SK Hynix has announced that it will be making investments in order to build additional facilities for DRAMs in Wuxi, China.

DRAM, NAND flash, and OLED display technologies are designated as "national major technologies" in South Korea, and any government funding needs to comply with S. Korea's 'Prevention and Protection of Leakage of Industrial Technologies Act' and of course, a government approval is required in order to be exported.

LG Display, which was planning to build facilities for 8th generation OLED displays in Guangzhou, has been in discussions the with South Korean Government about entering the Chinese market.