[The Editors' Verdict] Three Survival Strategies for Korea's Threatened Semiconductor Industry

'My Ally' Sora on US-China... Reviving Japan
Critical Need for Supergap Technology, Diplomacy, and Government Cooperation

The scenario unfolded exactly as expected. When China discovered cybersecurity risks in Micron, the largest memory semiconductor company in the United States, and imposed a sales ban, the U.S. immediately rebutted, calling it a "baseless measure." The U.S. also stated it would "closely coordinate with key allies and partners," while China countered by saying, "Do not intimidate other countries." Caught in the middle, the South Korean government, finding it difficult to choose sides, drew a line by saying, "It is a matter for companies to decide."

What if the U.S. counterattacks after China? The pressure from both countries to "take sides" will undoubtedly become more blatant. The U.S. could leverage subsidies to impose export restrictions on semiconductor equipment to China. Likewise, China might adopt measures such as halting exports of raw materials that could deal a fatal blow to our economy. Even if the South Korean government distances itself by saying it is a matter for companies like Samsung Electronics and SK Hynix, this is not just a corporate issue. The semiconductor industry itself has become a core part of a nation's economic and security strategy, not merely a business.

There is another obstacle: Japan, which dreams of a resurgence as a semiconductor powerhouse. Recently, Japanese Prime Minister Fumio Kishida gathered the world's largest companies in memory and system semiconductors, including Samsung Electronics, TSMC, and Micron, and secured investment commitments. Until now, Japan had led its semiconductor industry with its own technology and companies, but it has now sharply shifted toward a 'global division of labor.' While the global semiconductor industry has horizontally divided labor between fabless companies specializing in design and foundries specializing in contract manufacturing, the 'old Japan,' which insisted on a vertical, integrated strategy centered on domestic companies for design and manufacturing, is no longer present.

Semiconductors, along with automobiles, are key industries driving the South Korean economy. They are also the growth engines for the future South Korean economy. To maintain the current status as a leading power amid the fierce global semiconductor war, it is essential to develop diplomatic skills that are wise and flexible. Just as the U.S. is necessary for security, China remains an important economic cooperation partner for us. We must not provoke China unnecessarily. The U.S., which is engaged in a semiconductor battle with China, as well as Japan, are opening channels for high-level exchanges and dialogue.

The political sphere must not remain idle. Intel CEO Pat Gelsinger said, "In the past 50 years, oil reserves determined the global geopolitical order, but in the next 50 years, the location of semiconductor fabs will be more important." This is why major countries such as the U.S., Japan, and Europe are concentrating their capabilities on the semiconductor industry. At the same time, Samsung Electronics announced it will invest a total of 300 trillion won over 20 years to build five advanced semiconductor manufacturing plants in the semiconductor cluster the government plans to establish. SK Hynix is also developing a semiconductor cluster. For these corporate investments to proceed without disruption, political cooperation is absolutely necessary. Both the ruling and opposition parties should support the semiconductor industry responsibly rather than using it as a tool for political conflict.

Companies must secure ultra-advanced technologies recognized by both the U.S. and China and establish those technologies as the global semiconductor market standard. Professor Kwon Seok-jun of Sungkyunkwan University warned in his book, Semiconductor Three Kingdoms, "It is crucial for South Korea to secure an irreplaceable position in the semiconductor industry. Missing the timing could lead us down the path Japan took." As Professor Kwon pointed out, it is not easy to secure competitiveness in advanced industries, but regaining it after losing it is even harder. The semiconductor industry is one where a leading position can fall to last place in an instant.