hankyoreh

“Self-sufficiency” is emerging as a major focus in the US, Japanese, and Chinese semiconductor markets amid fears of disruptions to the global supply network due to the novel coronavirus pandemic. The changes underway focus on the future of South Korea’s semiconductor industry as well.

The US shift toward “semiconductor nationalism” first came to South Korea’s attention through a May 10 report in the Wall Street Journal, which said that the Donald Trump administration was seeking to reduce its dependence on Asia for semiconductor technology. The piece also included details about the Trump administration showing an interest in bringing a factory for the Taiwanese foundry company TSMC to the US and expanding Samsung Electronics’ foundry plant in Austin.

Similar developments are underway in Japan. On May 11, the Japanese business journal Diamond Weekly reported that the Ministry of Economy, Trade and Industry (METI) was secretly pursuing a project to draw production and development bases for companies such as Intel and TSMC to Japan. This has led numerous analysts to conclude that the US and Japan have launched a full-scale response to fears that the COVID-19 pandemic will lead to a global supply network collapse.

China is also moving to “internalize” semiconductor production as part of its “Made in China 2025” policy, which involves increasing its semiconductor self-sufficiency rate to 70% by 2025. HiSilicon, a fabless subsidiary of Huawei that designs semiconductor chips, has been sending large entry-level smartphone chip manufacturing orders to SMIC, China’s largest foundry business.

Some experts are viewing such developments by the US, China, and Japan as part of each respective country’s resolve to claim the upper hand in the system semiconductor market, which is growing in importance in the Fourth Industrial Revolution. In particular, they see the US’ efforts to bring in a TSMC plant as reflecting its aims of preventing China’s technological dominance in semiconductor technology amid the two sides’ trade war.

“With TSMC manufacturing semiconductors that were designed by the US companies Qualcomm and Nvidia, a lot of TSMC’s engineers have been going over to China,” explained Hanyang University materials engineering professor Park Jae-geun, professor of materials engineering at Hanyang University, in a telephone interview with the Hankyoreh on May 12.

“Another reason they want to have a TSMC plant in the US is out of concerns about the leaking of technology,” he suggested.

The moves by the US, China, and Japan are also expected to have ramifications for South Korean semiconductor companies. To begin with, Samsung Electronics stands to lose US fabless clients like Qualcomm and Nvidia, if construction of a new TSMC plant in the US goes ahead in accordance with the Trump administration’s aims. The decision on whether to expand its Austin plant is also not an easy one for Samsung Electronics to make.

“It costs a lot to expand a plant in the US,” Park noted -- which means Samsung Electronics will need to come up with an intermediate-term investment plan or some other change to its larger project strategy.

As a long-term measure, some experts called for strengthening the technological capabilities of South Korea’s semiconductor companies -- focusing on establishing competitiveness while observing changes in the situation.

“In South Korea, the industry is skewed heavily toward DRAM and other memory semiconductors, but in the end industry competitiveness is going to come down to the ability to design [high value-added] semiconductor chips,” predicted Choi Hyung-sub, professor at Seoul National University of Science and Technology Choi Hyung-sub.

By Song Chae Kyung-wha, staff reporter

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