'Global Power' Taiwan Launches Vaccine Diplomacy with TSMC Semiconductors... What About Korea?

[Asia Economy Reporter Su-yeon Woo] Amid a global semiconductor shortage, major countries have requested the Taiwanese government to increase production, and it has recently emerged that the Taiwanese government asked the German government to assist in purchasing COVID-19 vaccines in exchange for boosting semiconductor output.

According to local media Taiwan News on the 3rd, Wang Mei-hua, Taiwan's Minister of Economic Affairs, met with Thomas Prinz, the head of the German Association in Taiwan, on the 28th of last month and conveyed a request for the German government to help purchase vaccines for Taiwan within their possible capacity. It was reported that Prinz promised to relay Minister Wang's request to the German government.

After the meeting, Minister Wang told reporters, "The semiconductor shortage in the global automobile market highlights the importance of Taiwan's semiconductor industry," adding, "Since Taiwan has yet to secure vaccines, I expressed related opinions to the German representative."

TSMC logo

This meeting took place after governments of Germany, the United States, Japan, and others requested the Taiwanese government, which hosts the world's largest foundry company TSMC, to increase production of automotive semiconductors. Previously, the Taiwan Institute of Economic Research proposed a policy of exchanging semiconductors for COVID-19 vaccines, and judging from Minister Wang's remarks, it is interpreted that Taiwan has officially embarked on 'vaccine diplomacy' leveraging its 'semiconductor power.'

Especially for European countries where the automobile industry is a key sector, securing semiconductors, which are essential components of vehicles, is a critical issue tied to their national economies' survival. As competition for securing supply in the automotive semiconductor market intensifies, Taiwan's diplomatic status utilizing its industrial power is expected to rise.

As of the fourth quarter of last year, automotive semiconductors accounted for about 3% of TSMC's total sales, a relatively small portion, but due to the global supply shortage, their industrial importance is expected to continue expanding for the time being. TSMC is already considering up to a 15% price increase for automotive semiconductors. Ki-hyun Ahn, Executive Director of the Korea Semiconductor Industry Association, analyzed, "The recent industrial status of semiconductors has risen to a level where they can demand vaccines," adding, "In the automobile industry, which requires hundreds of semiconductors per vehicle, failure to secure semiconductors could even lead to the collapse of the industrial ecosystem."

On the other hand, South Korea maintains its status as a semiconductor powerhouse in the global market but remains in the early stages in the automotive semiconductor sector. Factories producing automotive semiconductors mainly use 8-inch wafer processes, but domestic foundry companies like Samsung Electronics focus on 12-inch processes, which are not profitable for automotive semiconductor production, making short-term production increases difficult. Moreover, automotive semiconductors, which are critical for human safety, have much stricter development and process requirements.

Vehicle Semiconductor Application Sector / Photo by Samsung Electronics Semiconductor Blog

Experts emphasize that considering the future prospects of the automotive semiconductor market, domestic companies need to increase localization rates and build an industrial ecosystem centered on next-generation semiconductors such as AP (Application Processor) and C-V2X (Cellular Vehicle-to-Everything). The fact that automotive semiconductor companies like NXP and TI are emerging as potential acquisition targets for Samsung Electronics, which is preparing for M&A, is for this reason.

Additionally, the lack of a focal point for 'vaccine diplomacy' using semiconductors is cited as a problem for South Korea. There are also criticisms that with Samsung Electronics Vice Chairman Lee Jae-yong's imprisonment, the contact point that could serve as a bridge between the government and key figures in the global industry has disappeared. It is known that Lee was scheduled to meet high-ranking officials influential in Europe and the Middle East's multinational pharmaceutical companies as a government special envoy.

An industry insider said, "Cases of utilizing industrial resources for diplomacy are increasing, such as China's rare earth material export restrictions and Japan's semiconductor core material export regulations," adding, "South Korea must also seek active solutions to respond to this trend."

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