"Semiconductor Clients Anxious Over Taiwan Risks"
"South Korean Government Should Also Strive to Attract TSMC Factory"
Former Mirae Asset analyst Lee Kwang-soo predicted that the recent strong earthquake in Taiwan, which has raised concerns about the global semiconductor supply chain, could become an important turning point for Korean semiconductor companies to expand their market share in the foundry (semiconductor contract manufacturing) sector. He assessed that semiconductor clients such as Apple might naturally turn their attention to Korean companies like Samsung Electronics, a competitor in the foundry market.
On the 8th, Lee appeared on SBS Radio's 'Kim Tae-hyun's Political Show' and explained, "Taiwanese semiconductor company TSMC holds over 60% of the global foundry market share, making it the world's number one company." He added, "Due to the semiconductor production disruptions caused by the Taiwan earthquake, customers are likely to feel uneasy about Taiwan's geopolitical risks." He also mentioned, "There have been analyses in the past suggesting that if China invades Taiwan, the total damage could reach up to 10 trillion dollars."
On the 3rd, Taiwan experienced an earthquake measuring 7.2 in magnitude (the European-Mediterranean Seismological Centre and the U.S. Geological Survey reported it as 7.4). Taiwanese authorities announced that this was the largest earthquake since the September 21, 1999 quake, which measured 7.6 and resulted in approximately 2,400 deaths.
Concerns arose that the earthquake could disrupt production at TSMC, the world's largest semiconductor company. Although TSMC stated in a press release on the 5th that most of their facilities had been restored, local Taiwanese media such as Digitimes estimated the damage to be around 84 billion Korean won. Lee explained, "This is the first earthquake above magnitude 7 in Taiwan in 25 years. The foundry plants in Taichung and Tainan experienced seismic intensity level 4, and other plants in Hsinchu experienced level 5, which are relatively low intensities. However, semiconductor factories contain highly sensitive equipment, so even minor impacts can cause production disruptions." He added, "Korean personnel have reportedly been dispatched for equipment restoration and testing," and noted, "We need to monitor the situation further to understand the full impact."
Lee also stated, "The semiconductor market will continue to grow, so investment is necessary. Until now, we couldn't do what we wanted just because we wanted to, but this time we might be able to create a trigger (Trigger: an event or factor that causes a specific reaction or incident)." He assessed, "From the buyer's (client's) perspective, if TSMC is deemed risky, they might test Samsung Electronics. Samsung has been continuously investing in foundry, but at a slower pace, so this opportunity could serve as a trigger to accelerate that."
He also urged the Korean government to actively pursue attracting TSMC's factory to Korea. Lee said, "TSMC announced a $40 billion investment in the U.S. to diversify its global production network and is also building a plant in Kumamoto Prefecture, Japan, where the Japanese government is reportedly providing about 10 trillion won in support. The Korean government should not just see TSMC as a competitor but should make efforts to enable TSMC to establish a factory in Korea."
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