The "Semiconductor Three Kingdoms" Ignited by COVID-19... Round 2 of the Hegemony Battle Begins

US Government's Semiconductor Self-Sufficiency Policy Met with Taiwan TSMC Factory Expansion... Intel and Samsung Also Contemplating
Xi Jinping's 'Semiconductor Heartland' Vision Accelerates Semiconductor Rise... Leading Technology Gap to Narrow Within 3 Years
Japan's Semiconductor Nationalism Grows... Promoting Reshoring by Attracting Global Companies

[Asia Economy Reporter Kim Hyewon] The curtain has risen on the second round of the semiconductor technology hegemony war triggered by the COVID-19 pandemic, as Taiwan's TSMC, the world's largest semiconductor foundry company serving renowned clients such as Apple, Qualcomm, and Nvidia, has chosen the United States as its overseas production base. Amid prevailing expectations that protectionism emphasizing health, quarantine, and security will intensify even after the end of COVID-19, 'economic nationalism' surrounding semiconductors has emerged as a core strategy for major countries including the U.S., China, and Japan.

The U.S. was the first to open the door to semiconductor economic nationalism in the post-COVID era. The Trump administration, recognizing the structural limitations of global supply chains exposed by the worldwide spread of COVID-19, pulled out the 'semiconductor self-sufficiency' card. Just four days after the Wall Street Journal (WSJ) first reported on June 10 (local time) that "the Trump administration aims to reduce Asia's dependence on semiconductor technology," concrete news has emerged that Taiwan's TSMC plans to invest about $12 billion (approximately 14.74 trillion KRW) to build a semiconductor factory in Arizona, USA. Besides TSMC, which responded first, U.S. Intel and Samsung Electronics have also been consistently mentioned as likely partners in the Trump administration's semiconductor self-sufficiency project and are reportedly weighing additional investments.

Semiconductor economic nationalism movements triggered by COVID-19 are also appearing in Japan. According to the local media Diamond, Japan is secretly pushing plans to attract Asian bases of global semiconductor companies to its own country. Given the inevitable restructuring of the global value chain (GVC) due to COVID-19, attracting factories or research and development (R&D) centers of large semiconductor companies like Intel to Japan could also induce reshoring of Japanese material, parts, and equipment companies that had moved overseas. There is also a view that the ongoing Korea-Japan trade conflict has served as a catalyst strengthening Japan's semiconductor economic nationalism. Diamond pointed out, "When the Japanese government restricted exports of three key semiconductor materials?liquid hydrogen fluoride, extreme ultraviolet (EUV) photoresist, and fluorine polyimide?it revealed the reality of Japanese companies that had been dependent on large Korean corporations."

Some voices warn that Japan, which holds fundamental technologies, might re-enter the semiconductor market. An Ki-hyun, Executive Director of the Korea Semiconductor Industry Association, assessed, "If Japan starts full-scale production of DRAM, it could catch up within just five years," adding, "Japan has the technology, equipment, and sufficient personnel for DRAM."

China is a country that has concentrated its capabilities to improve semiconductor self-sufficiency ahead of the U.S. and Japan. Even before the COVID-19 crisis, China has been advancing toward the national goal of raising its semiconductor self-sufficiency rate to 70% by 2025, under the 'semiconductor heart theory' advocated by President Xi Jinping, who said, "Semiconductors are like the heart of a person." The core of China's semiconductor rise is autonomy. Especially as China was the fastest to enter and exit the economic crisis caused by COVID-19, it is aggressively pursuing Korea's semiconductor super-gap strategy by pouring astronomical amounts of money.

Song Myung-seop, a research fellow at Hi Investment & Securities, said, "China's entry into the memory semiconductor market is significant," expressing concern that "especially in NAND flash, our companies could come under influence starting next year." China currently has Changxin Memory Technologies (CXMT) aiming to mass-produce 17nm DRAM within this year, and Yangtze Memory Technologies Co. (YMTC) targeting 128-layer NAND production. The industry views that if these products are successfully produced within the year, the technology gap with Samsung Electronics could narrow to around three years.

Furthermore, the semiconductor self-sufficiency movements of the U.S., China, and Japan are also seen as strategic moves to preempt the next-generation leading non-memory (system) semiconductor market, which the Moon Jae-in administration is focusing on as one of the three new growth industries. The U.S. Department of Defense recently pointed out in a report that "America's digital economy relies on the triangle of China, Taiwan, and Korea," emphasizing the need to strengthen semiconductor self-sufficiency, which is interpreted in the same context. An industry insider said, "With the U.S.-China trade dispute, Japan's export restrictions, and now COVID-19, the semiconductor industry is at the center of international trade issues involving the U.S., China, Japan, and Korea," adding, "China's semiconductor rise poses an immediate threat to the domestic semiconductor industry, but at the same time, it could create opportunities in the materials and parts sectors."

This content was produced with the assistance of AI translation services.