[The Fierce Semiconductor Battle] Big Deals Pour In... But South Korea's Semiconductor Growth Stalls

57 Trillion Won Investment in K-Semiconductor Industry
Need for Regulatory Relaxation, Tax Benefits, and Semiconductor Talent Development

[Asia Economy Reporters Sunmi Park, Jinho Kim]"The semiconductor technology war is a speed race where a half-year gap determines victory or defeat. If support is provided 2-3 years later after a preliminary feasibility study, overseas competitors will have already advanced far ahead." (16th Semiconductor Investment Activation Meeting - Lee Jung-bae, President of Samsung Electronics)

While companies are actively engaging in mergers and acquisitions (M&A) and investments backed by government support to foster the semiconductor industry, K-Semiconductor, which supports the Korean economy, is not accelerating its growth. With the presidential election scheduled for March, it is difficult to announce large-scale investment plans, raising concerns that K-Semiconductor's competitiveness may fall behind competitors who are aggressively expanding and investing on a large scale.

According to the semiconductor industry on the 22nd, neither Samsung Electronics nor SK Hynix, which completed the first phase of Intel's NAND business acquisition at the end of last year, currently have M&A plans that could raise their industry rankings. Samsung Electronics, aiming to be the number one system semiconductor company by 2030, has left the possibility of M&A open, but it is not easy to proceed as global countries are raising barriers of scrutiny. Only small M&A attempts within the domestic ecosystem continue, such as Doosan Group's attempt to acquire Tesna, Korea's number one semiconductor post-process testing company and a semiconductor partner of Samsung Electronics.

Meanwhile, overseas competitors are actively expanding their territories worldwide, leveraging full government support to grow the semiconductor industry. Last year, U.S. Intel, which lost the global semiconductor sales top spot to Samsung Electronics, declared its entry into the automotive semiconductor market by creating a dedicated automotive organization in its semiconductor foundry division.

With the automotive semiconductor market expected to grow at double-digit rates for five consecutive years, increasing from $50 billion (about 59.8 trillion KRW) in sales last year to $84 billion by 2025, Intel aims to preempt the market ahead of Samsung Electronics and TSMC. Additionally, this year Intel announced a $20 billion investment to build two advanced semiconductor factories in Ohio, USA, and a $5.4 billion acquisition of Tower Semiconductor, the world's eighth-largest foundry based in Israel.

TSMC, the world's number one foundry, also plans to execute its largest-ever investment of $44 billion (about 52 trillion KRW) this year. Following a $12 billion investment in a foundry plant in Arizona, USA, it is also constructing a semiconductor factory in Japan in partnership with Sony.

China, pushing for a 'semiconductor rise' with the goal of increasing semiconductor self-sufficiency to 70% by 2025, has its largest foundry company SMIC deciding on a record $5 billion investment this year. Supported by government backing, even home appliance companies in China are dedicating themselves to semiconductor investments.

Active Institutional Support Essential for K-Semiconductor Growth

Experts agree that for the K-Semiconductor industry, expected to receive 57 trillion KRW in investment this year, to gain growth momentum without overseas M&A, more active institutional support is needed, ranging from infrastructure development to tax benefits.

Jae-geun Park, Chairman of the Korea Semiconductor Display Association, said, "Regulatory relaxation on infrastructure development is the most important issue to be discussed ahead of the implementation of the National Advanced Strategic Industry Special Act (Semiconductor Special Act) in July," adding, "Regulatory easing related to industrial complex development and tax benefits should be adjusted in a way that is favorable to companies."

Active government roles are also necessary in overseas M&A. Jong-ho Lee, Director of the Semiconductor Joint Research Center at Seoul National University, said, "The government can intervene in the approval process of M&A, and with countries raising barriers to semiconductor M&A, our government needs to respond more actively than it currently does."

Addressing the shortage of core talent is also essential for K-Semiconductor growth.

Sung-chul Kang, Research Fellow at the Korea Semiconductor Display Technology Society, stated, "Specialized talent development is most important, but this aspect is not sufficiently reflected in the Semiconductor Special Act to be implemented in July," and suggested, "As global advanced countries fiercely compete to dominate semiconductors based on national support, our government also needs to take a direct and active role." Dong-hwi Cho, Professor of Embedded Systems Engineering at Incheon National University, added, "It is time to find ways to nurture excellent semiconductor talent not only in the metropolitan area but also in provincial regions."

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