According to Korean media reports, global semiconductor competition is becoming increasingly fierce. In order to ensure the advantage of semiconductor exports, South Korea recently plans to spend 20 trillion won (approximately US$13.9 billion) to support the local chip industry. It will follow the successful model of Taiwan Semiconductor Manufacturing Company (TSMC) and establish South Korea's "Korea Semiconductor Manufacturing Co., Ltd." (KSMC) to solve the problem of uneven development of the domestic chip industry.
South Korea's "Seoul News" reported that at a recent seminar held by the National Academy of Engineering (NAEK), South Korea's industrial and academic circles proposed to follow TSMC and prepare to establish a government-funded chip foundry manufacturer, Korea Semiconductor Manufacturing Corporation (KSMC). The plan aims to create a balanced ecosystem between foundries and fabless companies through diversified manufacturing processes, including cutting-edge and traditional processes, to address challenges faced by the domestic semiconductor industry and strengthen competitiveness in the global market. Korean media KoreaBizWire reported that some experts estimate that an investment of 20 trillion won in KSMC can generate 300 trillion won in economic benefits by 2045.
According to South Korea's "Herald Economic News", people in the Korean semiconductor industry believe that although the global semiconductor industry has begun to recover this year, the Korean semiconductor industry is facing the "biggest crisis in history." Against the background of increasingly fierce competition in the global chip industry, South Korea's previously leading memory chip technology advantages have gradually been weakened. Problems such as slow investment, brain drain, and insufficient policy support have also made the development of the industry difficult. Data show that from 2018 to 2023, South Korea's memory chip exports dropped from US$83 billion to US$42.9 billion, a decrease of nearly half.
KSMC will be responsible for solving structural problems in the industry. Kwon Seok-jun, a professor at South Korea's Sungkyunkwan University, suggested that South Korea can, like Taiwan, build wafer foundries such as United Microelectronics (UMC) and Power Semiconductor Manufacturing Co. (PSMC) that focus on mature and special processes to complement companies with advanced process technologies.
"Taiwan maintains a balanced ecosystem, which allows more than 250 fabless companies to develop naturally in Hsinchu," Kwon Seok-jun said. Currently, South Korea is too dependent on Samsung Electronics' advanced processes below 10 nanometers, which makes it difficult for many small system semiconductor companies to thrive. The committee also emphasized the need to actively cultivate memory and advanced packaging technologies and make timely investment in facilities.
At the same time, experts call on the Korean government to strengthen support for small and medium-sized enterprises while promoting the development of large enterprises. It can expand the R&D competitiveness of the overall ecosystem through direct investment in small and medium-sized materials, parts and equipment companies.
Lee Hyuk-jae, a professor at the Department of Electrical and Computer Engineering at Seoul National University, said: "If these warning signs are not addressed, it may cause the Korean semiconductor industry to decline in the global technology competition and cause irreparable losses to the national economy." He believes that weak growth in the fabless semiconductor design and packaging industry, brain drain, and excessive regulation are the main risks.
However, some people in the industry are worried about whether government-funded companies like KSMC can effectively respond to the challenges of advanced manufacturing processes. SK Hynix’s CEO suggested that some of Samsung’s old fab facilities could be considered for use as part of the KSMC plan.