According to a forecast by the Semiconductor Industry Association (SIA) and Boston Consulting Group (BCG), the production rate of advanced semiconductors smaller than 10 nanometers in South Korea is expected to drop from the current 31% to less than 10% by 2032.
This decline is attributed to major players like Samsung Electronics and SK Hynix, who are presently sharing the global advanced semiconductor market with Taiwan’s TSMC but have chosen to establish their latest factories in the United States instead of S. Korea.
In contrast, the U.S. production share is expected to rise from 0% to 28% in the next eight years, fueled by aggressive strategies, including a subsidy of $52.7 billion and various incentives aimed at attracting factories.
Encouraged by the U.S. policy of reshaping the semiconductor supply chain, Samsung Electronics is constructing an advanced foundry in Texas, and SK Hynix is building a packaging plant in Arizona. With a $6.4 billion subsidy, Samsung plans to produce next-generation cutting-edge 2-nanometer chips at its plant in the U.S.
The Biden administration in the United States has implemented a comprehensive act to support its semiconductor industry. The goal is to produce 20% of advanced semiconductors domestically by 2030, and current projections suggest that this target will be significantly exceeded.
On the other hand, South Korea’s semiconductor industry faces an uncertain future, despite the government’s announcement of a project to develop a semiconductor mega-cluster in Yongin, Gyeonggi-do. The government plans to invest 622 trillion won ($455.4 billion) by 2043 in this project.
This is because issues such as delays in the construction of Samsung’s Pyeongtaek semiconductor plant due to transmission line problems and delays in starting construction at SK Hynix’s Yongin plant due to water supply issues are hindering the S. Korean government’s plans.
Moreover, with the strict 52-hour workweek policy and other regulatory hurdles such as the Severe Accident Punishment Act (SAPA), the exodus of semiconductor firms from S. Korea could accelerate further.
Securing advanced semiconductor business inside the country is crucial, not only for economic reasons but also for national security. Taiwan is putting in an all-out effort to defend TSMC’s factories, underscoring the geopolitical significance of maintaining semiconductor production locally.
If the prediction by the SIA comes true and the share of domestic production of advanced semiconductors declines significantly, it could lead to a national disaster.
