Colley Hwang, CEO of Taiwan’s IT publication DigiTimes, recently stated, “The real issue for TSMC is whether it can maintain its competitive edge even after 2030 when the U.S. and Japan aggressively expand their domestic semiconductor production.”
The issue with TSMC is also relevant to Samsung Electronics and SK hynix. A fundamental question is arising in the market: can Korean companies continue to maintain their technological lead beyond 2030 when Intel, Micron, TSMC, and others complete semiconductor factories in the U.S. and Japan and begin mass-producing products?
An Ki-hyeon, executive director of the Korea Semiconductor Industry Association, stated on May 7, “The key to competitiveness is continuing to excel in the areas where we already do well,” emphasizing the need for subsidies. “In the past, there was no competition in the semiconductor industry, but now global competition is intensifying, and the situation is different from before.”
There are concerns within and outside the government that Korea’s market share in memory semiconductors is declining. According to a report published by the Korea Institute for International Economic Policy (KIEP) in February, Korea’s market share in the memory semiconductor export market fell from 29% in 2018 to 19% in 2022, dropping to second place. Meanwhile, China’s share increased from 24% to 26% during the same period.
This decline is partly due to increased exports from Samsung Electronics and SK hynix’s Chinese factories, but China is also expanding its presence in the memory semiconductor market, particularly through CXMT and YMTC. Jeong Hyeong-gon, senior research fellow at KIEP, emphasized, “Korea’s semiconductor industry has been losing global market share continuously since 2018,” adding, “Policy efforts should focus on strengthening the domestic semiconductor manufacturing base and ecosystem.”
Meanwhile, Intel and Micron plan to rapidly increase semiconductor production in the U.S. Micron alone plans to manufacture 40% of its memory semiconductors in the U.S. Experts believe that although Samsung Electronics and SK hynix currently have a clear technological advantage in the memory sector, maintaining this advantage for the next 5 to 10 years will be challenging. A high-ranking official in the semiconductor industry stated, “Micron’s production of memory semiconductors in New York from 2028 marks a different game altogether,” adding, “There could be a significant crisis in terms of whether Korean companies can remain competitive 10 years down the line.”
The situation is even more concerning in the system semiconductor sector. Kim Yong-seok, a professor at the Department of Electrical and Computer Engineering at Sungkyunkwan University and former vice president of the Korea Semiconductor Engineering Society, expressed concerns, stating, “While we have high-bandwidth memory (HBM) in the memory sector, system semiconductors are still lagging behind TSMC, and major U.S. fabless companies are already collaborating with TSMC.” He emphasized, “Just as the U.S. government is encouraging domestic semiconductor manufacturing by building factories on its soil and enhancing chip production capabilities, subsidies are needed to promote semiconductor manufacturing investments in Korea.”
This situation has led to calls for the government to focus on expanding technological gaps through direct support for the semiconductor industry. Senior Research Fellow Jeong emphasized, “Investment incentives and subsidies, which are insufficient compared to rival countries, must be raised to the world’s highest level.”
In fact, Japan’s semiconductor subsidy scale over the past three years has reached 3.9 trillion yen (US$25 billion), equivalent to 0.71% of its GDP. This figure is higher compared to Germany (0.41%) and the U.S. (0.21%). In contrast, Korea is still leaning toward expanding tax credits and loan support instead of subsidies. Within the government, reasons such as maintaining fiscal soundness, concerns over supporting large corporations, and prioritizing support for weak sectors like materials, parts, and equipment are being cited.
Experts criticize the government’s approach as myopic. Another high-ranking official in the semiconductor industry stated, “The U.S. and Japan are approaching this with a long-term vision,” emphasizing, “They intend to take control of semiconductor leadership.” Kwon Tae-shin, former director of the Korea Economic Research Institute and former chief secretary to the Prime Minister, stated, “I understand that the burden on the budget is high due to the significant increase in welfare spending during the previous administration, but semiconductors and batteries are the most crucial for Korea’s livelihood.” He emphasized, “We need to consider this from a long-term perspective.”
