[Initial Insight] The US-Japan Chase, Countered by K-Semiconductor Speed Race

Escalation into Semiconductor Hegemony Rivalry
Groundbreaking Measures to Boost Corporate Investment

Kwangho Lee, Head of the Industrial IT Division Corporate Team

Competition over semiconductor supremacy is escalating from corporate rivalry to a confrontation between nations. Some experts regard the semiconductor technology supremacy race as a significant ideology signaling the beginning of a new Cold War era. This implies that the country that wins the semiconductor competition could secure a crucial prerequisite to becoming the global leader of the next generation.

Just a year ago, the United States declared it would focus on reorganizing the semiconductor supply chain to counter China through the ‘Chip 4’ alliance with South Korea, Japan, and Taiwan, but it has since changed its stance. This year, the U.S. is expanding its industrial dominance across all stages?not only in semiconductor ‘development’ and ‘design’ but also in ‘production.’ While it previously emphasized system semiconductors, it is now entering memory semiconductor production and pursuing plans to gain an advantage in the foundry (contract manufacturing) sector in line with advancements in artificial intelligence (AI) technology.

The ‘Intel Foundry Services’ forum held at the end of last month clearly demonstrated the U.S. government’s commitment to fostering the semiconductor industry. At this event, Intel announced its goal to achieve 1.4-nanometer (one billionth of a meter) process technology by 2027 and to become the second-largest player in the foundry industry by 2030. This means Intel aims to surpass Samsung Electronics, which currently holds the second position. Intel’s foundry market share is about 1%, only one-tenth of Samsung Electronics’ 12.4%, but it is noteworthy that big tech companies such as Microsoft (MS), OpenAI, and Meta are supporting Intel.

Following Intel, Micron, the third-largest memory semiconductor company, announced that it has become the world’s first to mass-produce the 5th generation High Bandwidth Memory (HBM) ‘HBM3E’ for next-generation AI semiconductors. According to Taiwanese market research firm TrendForce, Micron’s HBM market share last year was estimated at 9%, and it is evaluated to have surpassed the technological levels of SK Hynix (53%) and Samsung Electronics (38%), which hold the first and second positions, respectively. Moreover, the first to partner with Micron was Nvidia, the strongest player in AI semiconductors.

Big tech companies are also entering the semiconductor field. Sam Altman, CEO of OpenAI, the developer of ChatGPT, has ambitions in semiconductors that exceed imagination. Altman stated, “Chip supply for AI proliferation is too slow,” and announced plans to raise up to $7 trillion (approximately 9,300 trillion KRW) to reorganize the global semiconductor industry. This amount is 14 times South Korea’s budget for this year (656.9 trillion KRW).

Japan is also mounting an all-out semiconductor effort involving both the public and private sectors. The TSMC foundry plant in Kumamoto Prefecture, completed at the end of last month, symbolizes this movement. The Japanese government provided nearly half of the investment as subsidies and offered administrative conveniences such as lifting the greenbelt restrictions, which had been in place for 50 years, shortening the usual five-year factory completion period to two years. Japan expects to revive itself as a semiconductor powerhouse by combining its strengths in semiconductor materials, parts, and equipment with TSMC’s manufacturing capabilities to expand domestic production capacity.

South Korea’s semiconductor industry faces a significant threat from the fierce pursuit by the United States and Japan. The government plans to expedite the approval process for large-scale advanced semiconductor complexes by establishing a dedicated task force (TF) for semiconductor-specialized complexes and opening a hotline with CEOs of major domestic semiconductor companies. However, efforts limited to deregulation and tax reductions may not be sufficient to encourage bold corporate investments. Now is the time to focus all efforts on a speed race. There is not much time left.