[The Editors' Verdict]K-Semiconductors in Crisis, Strong Leadership Is Urgently Needed

Business Leaders Struggle with US-China Strategy
Government and Ruling Party Must Push Regulatory Reform Without Hesitation

"Do not confront the US-China hegemonic competition." This has recently become a common management philosophy among Korean business leaders. After the paradigm of separating security and economy?'Anmi Gyeongjung' (security with the US, economy with China)?has run its course, pressure is mounting on our companies to choose either the US or China, but it is not an easy task. Even if companies respond well, they only break even; if not, they are likely to suffer fatal damage. Advice to maintain appropriate neutrality from both sides is emerging, but this is the responsibility of the government handling diplomatic and economic affairs, not an area where businesspeople can intervene.

This is evident in the recent trip to China by Samsung Electronics Chairman Lee Jae-yong after three years. When reporters asked him about his impressions at the China Development High-Level Forum held in Beijing on the 25th, he only replied, "The weather is nice." This contrasted sharply with Apple CEO Tim Cook, who praised China's technological innovation during the same trip. What if Chairman Lee had acted like CEO Cook? It would be precarious. Apple is one of the representative US companies. Even if the US government disapproves of CEO Cook's actions, it is difficult to penalize Apple.

But Samsung is different. Hasn't the US already sent a message to withdraw from the Chinese market within ten years? Recently, the US disclosed detailed regulations of the semiconductor support law's guardrail provisions, stating that advanced semiconductor production in China can only expand up to 5% within ten years, but this is essentially meaningless. Over the past five years, DRAM and NAND flash have increased by 5% and 10% annually, respectively, so being told to increase production by only 5% over ten years is tantamount to being told not to pursue the memory business.

Some argue that if the US administration changes within ten years, this provision might be revised, but this is wishful thinking. Regardless of the administration, US policy has always prioritized 'America First.' The US-China trade dispute, which began with former President Donald Trump's tariff war against China, continues under the Biden administration, a clear example. Conversely, expecting change from China is also difficult. This situation makes it hard to guarantee the future of the semiconductor industry, which has led the Korean economy.

Hong Hopeng, a China economic expert and professor at Johns Hopkins University, said, "What we need now amid rising US-China tensions is to steer policies in a less risky and healthier direction." Coincidentally, Samsung announced plans to invest 300 trillion won in the Yongin area of Gyeonggi Province to create the world's largest semiconductor cluster. This is Samsung's 'less risky and healthier strategy' devised amid the US-China semiconductor hegemony war.

The problem is that there is no strong political leader to robustly support this. After the painful passage of the Semiconductor Special Act, the government pledged to accelerate the process with a rapid preliminary feasibility study, but there are mountains of issues to resolve, from site permits to environmental concerns. Next year's general election is also a variable. Whether the ruling or opposition party, if there is local opposition to factory establishment, various regulations will likely be imposed again.

At times like this, the government and ruling party must demonstrate strong leadership to unwaveringly drive regulatory reform. The opposition party should also, for once, lead policies with a sense of responsibility toward the semiconductor industry rather than political calculations. Only then can the semiconductor cluster be launched as planned in 2026.