[2023 Semiconductor Outlook] Semiconductor Competitiveness Surpassed by China in 2 Years... "2025 Is a Turning Point"

[Asia Economy Reporter Han Yeju] While South Korea has been complacent with its current position as a 'semiconductor powerhouse,' the US-China hegemony competition and semiconductor support laws from major rival countries are threatening the status of the domestic semiconductor industry. Due to the semiconductor industry's structure, it is difficult to choose a side between the United States, which holds many fundamental semiconductor technologies, and China, which accounts for 40% of South Korea's semiconductor exports, putting the country in a 'catch-22' situation.

More than anyone else, the United States is taking bold actions. In July, the US Congress passed the 'CHIPS and Science Act.' This law contains the US's comprehensive national science and technology strategy to win the technological hegemony competition with China. Under this law, the US plans to invest $280 billion (approximately 370 trillion KRW) in the semiconductor industry.

In March, the US proposed the formation of the 'Chip 4 Alliance,' a semiconductor supply chain consortium, to the governments of South Korea, Japan, and Taiwan, accelerating the establishment of a semiconductor supply chain excluding China.

China's semiconductor rise is intensifying in response to US sanctions. Since the start of US sanctions, China has accelerated semiconductor development at the national level. In the 14th Five-Year Plan (2021?2025) announced last year, semiconductors were identified as one of the seven core technologies to be fostered. China is steadily progressing with its plan to raise semiconductor self-sufficiency to 70% by 2025.

The EU also proposed the 'European Semiconductor Act' in February this year, planning to create a fund worth 45 billion euros (approximately 62 trillion KRW) through public-private investments by 2030 and increase the EU's share in global advanced semiconductor production from the current 9% to at least 20%.

Japan's awakened moves are also drawing attention. Once dominating the global semiconductor market with over 50% market share, Japan has now designated semiconductors as a national strategic industry and is putting its all into reviving the semiconductor industry.

As countries worldwide actively foster the semiconductor industry, concerns are growing that competition in the global semiconductor market will intensify further, potentially shaking South Korea's status as the world's number one memory semiconductor country.

According to a recent report by the Korea Institute for Industrial Economics and Trade (KIET), an analysis of the comprehensive competitiveness of the semiconductor industry last year showed the United States (96) ranked highest, followed by Taiwan (79), Japan (78), China (74), South Korea (71), and the EU (66). South Korea was highly rated in memory semiconductors (87) but ranked lowest among the compared countries in system semiconductors (63), placing fifth overall among the six surveyed countries. Compared to the 2020 survey, South Korea and China's rankings reversed within a year. In the 2020 survey of five countries, the US (93.4) was first, followed by Japan (78.4), Taiwan (75.1), South Korea (68.6), and China (64.3).

Kim Yangpaeng, a senior researcher at KIET, analyzed, "Considering government support policies and major semiconductor companies' investment plans, the global semiconductor supply chain is expected to be reorganized around 2025. If the supply chain is reorganized, it is highly likely to negatively impact South Korea's global semiconductor industry status."