[The Editors' Verdict] A Semiconductor Warning Letter Delivered to Korea

Samsung Electronics Secures a Foothold for Semiconductor Resurgence
Warning Signs for Korea in the Global Hub Competition

"A significant milestone in a 50-year dream." (Kyung Kye-hyun, President of Samsung Electronics Device Solutions)

The meaning of the semiconductor subsidies that the U.S. government has decided to provide can be well summarized in this one phrase. Samsung Electronics is entering the foundry (semiconductor contract manufacturing) three-way competition alongside TSMC and Intel with almost equal standing on the hottest stage of semiconductor competition, while simultaneously securing a foothold to advance as a total semiconductor solutions company. On the other hand, it should be seen as a warning that South Korea’s handicap in the competition to become a semiconductor hub has become even clearer.

Samsung Electronics initially planned to invest $17 billion in this project but increased the investment scale to $45 billion and proposed to allocate $40 million to nurture semiconductor talent locally, securing a reward of $6.4 billion in subsidies. With this, Samsung Electronics can expand the scale of the factory being built in Taylor, Texas, and newly establish post-processing packaging facilities and research and development (R&D) centers, greatly expanding both the quantitative and qualitative base of its global business, including the order competition from major U.S. clients such as Nvidia, Apple, and Qualcomm.

The U.S. decision is the finishing touch on the semiconductor self-reliance roadmap declared by President Joe Biden in 2021, aiming to complete all processes from design, production, to advanced packaging within its own borders. In other words, it means that Samsung Electronics, the symbol of "K-semiconductor," has been substantially incorporated into the semiconductor ecosystem built by the U.S.

When you think about it, the term "K-semiconductor" is difficult to hold more than rhetorical significance considering the structure of the global semiconductor industry. What remains besides the fact that Samsung Electronics and SK Hynix are Korean companies? Companies must make decisions based on business viability, and the global competition to become a semiconductor hub is essentially a competition to attract companies, with speed and money being the key factors.

In this regard, our reality is close to stagnation. The government announced last week a plan to reduce the time required to develop the semiconductor industrial complex site in Yongin from 7 years to 3 years and 6 months, but since the Yongin cluster construction plan was announced in 2019 during the previous administration, it has taken 5 years just to decide on reducing the preparation time for groundbreaking in a broad sense. The fact that Japan, which is determined to revive its semiconductor industry, established a transnational cooperation plan with TSMC accompanied by huge subsidies and completed its first factory in no more than 4 years is highly suggestive.

Our internal conditions remain complex and challenging. It is hard to ignore the possibility of expanding blind anti-business sentiment triggered by the general election, and the defeat of the ruling party, which pledged semiconductor subsidies, has dampened the discussion. Without collaboration between the administration and the legislature, the future of the semiconductor industry is bleak. Both the government and the ruling and opposition parties talk about cooperation according to their own calculations. Is it a mere fantasy to break away from over-immersion in political and ideological matters and open the way for genuine cooperation by using "semiconductor cooperation" as a primer?covering agendas such as the method and scale of subsidy payments, the "K-Chips Act" at a crossroads between continuation and repeal, and the efficiency of the administrative system?