[The Editors' Verdict]State-Led Semiconductor Development: Late, But the Right Path

Baek Jong-min, Opinion Editor

President Yoon Suk-yeol personally announced a private-sector-led investment of 300 trillion won in a semiconductor cluster in Yongin, Gyeonggi Province. The joint efforts of the government and industry to elevate the status of ‘Semiconductor Korea’ is the right choice and a natural decision to secure future growth engines.

The history of the semiconductor industry also shows that this decision is correct. The collapse of semiconductor supply chains due to COVID-19 and the rise of artificial intelligence (AI) have changed the game. National support has become essential. Even the United States, which had long forbidden individual industry promotion policies at the national level, is now united across the executive and legislative branches to promote reshoring of semiconductor fabrication plants (FABs) that had moved overseas. The case of Taiwan’s TSMC, which received strong government support, clearly demonstrates the results of state-led semiconductor growth. Until the mid-1980s, Taiwan had no notable advanced industries, but last year, led by TSMC, it surpassed Korea in per capita gross domestic product (GDP). While the outstanding figure Morris Chang, who founded TSMC, made a decisive contribution, would the current results have been possible without the Taiwanese government’s unwavering commitment to nurturing the semiconductor industry over decades despite changes in administration?

As seen in Taiwan, the modern semiconductor industry is evolving into a comprehensive art that requires national policy support, corporate investment and research, and academic foundations to come together. Japan’s example serves as a cautionary tale about how important sustained effort is. In the 1980s, Japan threatened the U.S. semiconductor market through government support. The optical technologies developed in Japan led to lithography technology, a core foundation of semiconductor manufacturing, driving the rise of Japanese semiconductors. Subsidies and financial support were additional benefits. Japan’s rise led Intel to abandon DRAM and focus on central processing units (CPUs). The reason Japan’s glory did not last includes U.S. containment, reduced corporate investment following the burst of the bubble economy, and a lack of government support commitment.

As we enter a semiconductor winter, there are many warnings about Korea’s semiconductor status. Let’s think differently. Samsung Electronics began its foundry business, which has now become the center of the semiconductor industry, in 2005?18 years later than TSMC. Nevertheless, Samsung Electronics is now the second largest foundry company after TSMC. Although there is a gap, Samsung remains the only company that can still challenge TSMC. Samsung has even surpassed Intel’s advanced process technology, which was once considered an insurmountable barrier.

Over the past 18 years, have we treated the semiconductor industry as well as Taiwan did? The answer is no. In the mid-2000s, when Samsung Electronics and Hynix (now SK Hynix) sought to expand production lines, regulations preventing concentration in the Seoul metropolitan area held them back. While the legal intent for balanced national development is understandable, the nature of the semiconductor industry requires concentration. In the U.S., only states like New Jersey, New York, California, and Texas, where semiconductors were born, have semiconductor industries.

Our government has never hesitated to support the automobile industry during crises. Now, with the advent of the electric vehicle era, cars cannot be made without semiconductors. The decision has been made. Now is the time to move forward with full speed ahead.