Illustration: Chen Xia/GT
South Korean technology giant Samsung Electronics on Wednesday reported an increase of 1,458 percent in its second-quarter operating profit. This is a manifestation of the boom in chip manufacturing and supply in South Korea.
Many attribute Samsung’s good performance to a rebound in global semiconductor prices stoked by an artificial intelligence (AI) boom. The company’s chipmaking business generated more than half of its operating profit for the period, as the AI boom continues to fuel demand for advanced chips, according to media reports.
Not long ago, South Korea’s SK Hynix, another memory chipmaker, said it logged record sales of 16.4 trillion won ($11.8 billion) in the April-June period this year, riding on robust demand for AI chips, according to the Korea Herald.
The strong performances reported by Samsung, SK Hynix and other chip companies underpin South Korea’s semiconductor exports. The country’s total semiconductor exports jumped by 50.9 percent month-on-month in June to a record high of $13.42 billion.
Many economists believe that generative AI is about to further transform the global economy. As a result, global investment in this kind of industry has risen greatly over the past decade. The surge of interest in the use of generative AI means higher demand for semiconductors. Global semiconductor sales are projected to jump 13.1 percent in 2024 to $588.4 billion as demand for chips used for AI increases.
South Korea is one of the world’s top chipmaking nations, with its strength specifically lying in the memory semiconductor sector. The country announced earlier this year a 26 trillion won support package for its chip businesses, citing a need to keep up in areas like chip design and contract manufacturing amid “all-out warfare” in the global semiconductor market, according to Reuters.
South Korea’s efforts come as the US is carrying out a technology “decoupling” from China. The US government has called on its allies to adopt restrictions on semiconductor technology exports to China similar to those Washington has already implemented, as part of its efforts to undermine China’s ability to produce its own advanced computer chips.
Amid the boom of AI semiconductors, the US may step up pressure on its allies, including South Korea. If Seoul cannot resist that pressure, the semiconductor industry in the country will probably suffer.
China is an important production base and sales market for South Korean chip enterprises. Expanding cooperation with China in the semiconductor field, rather than following the “decoupling” approach of the US, would be beneficial for the South Korean economy.
The semiconductor sector has long been a pillar of the South Korean economy and a significant contributor to its exports. Samsung’s good performance in the April-June period deserves great attention, because it adds to evidence that South Korea has gained an advantage in the global boom for AI semiconductors.
South Korea should continue to move forward and offer more support to its chip industry, not the opposite. It would be a great pity if South Korea misses the opportunity brought about by AI development.
It’s no secret that the US wants to include South Korea’s chip industry in its containment strategy against China. But this is not in line with South Korea’s interests.
Reuters reported on Wednesday that the US plans to unveil a new rule in August that will expand US powers to stop exports of chip equipment to Chinese chipmakers, but shipments from allies – including Japan, the Netherlands and South Korea – will be excluded. If the report is true, it will be good news for South Korea’s semiconductor sector.
It is hoped that South Korea will enhance its policy independence, resist various forms of anti-globalization measures, and deepen mutually beneficial cooperation with China in diverse fields. It is the only way South Korea can maximize its economic interests amid the boom of the AI semiconductor sector.
The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn
