[Inside Chodong] The Great Semiconductor Offensive: Why the U.S., Our Ally, Is So Intimidating

The Government and Corporations Join Forces as 'One Team' to Pursue Supremacy
South Korea Remains Unprepared for the Coming War

There are two most useless worries in the world: worries about chaebols and celebrities. These are people who will live well and prosper anyway, so the saying goes that worrying about them so hard is pointless. However, I am going to make one of those useless worries. It is the worry about ‘Samsung’ that Korean media often raise. You might say, “Here we go again, Samsung,” but I am genuinely concerned about Samsung. This is because the United States, rallying under the banner of ‘America One Team,’ is intimidating.

Pat Gelsinger, Intel CEO, is delivering the keynote at the 'Intel Foundry Service (IFS) Direct Connect' held on February 21 (local time) at the McEnery Convention Center in San Jose, California, USA. Intel announced that it secured an 18A order from MS on the same day.
[Image source=Yonhap News]

Riding the wave of the artificial intelligence (AI) boom, American semiconductor company Nvidia, which occupies 80% of the high-end AI chip market, is advancing rapidly. Recently, other American companies Intel and Micron have also demonstrated their presence by mass-producing next-generation components. Notably, both companies revealed Microsoft (MS) and Nvidia as their customers along with the mass production announcements. Coincidentally, all are American companies. Even if advanced products are developed, they can become useless without customers to use them, but Intel and Micron have proudly shown that they have strong domestic companies supporting them.

The Biden administration is going even further. With the 2022 CHIPS and Science Act (CSA), it promised to provide a total of $52.7 billion (about 70 trillion won) in semiconductor production subsidies over five years to companies building semiconductor factories in the U.S., receiving over 600 investment intention letters from companies worldwide. However, now it seems to be stepping back, saying the requested amounts exceed the budget. Recently, there have been rumors that $10 billion might be prioritized for domestic company Intel.

U.S. President Joe Biden is holding a silicon wafer, a semiconductor material, during a video conference with executives from semiconductor, automotive, and tech companies at the White House on April 12, 2021. Photo by AP

The U.S. semiconductor design, manufacturing, and purchasing companies, along with the government, have united as one team to launch a massive offensive to regain semiconductor supremacy. This brings to mind a scene from 40 years ago. After the 1984 global semiconductor industry chicken game, the decline of Japan’s semiconductor kingdom began with a counterattack by American companies. In June 1985, the U.S. Semiconductor Industry Association filed an anti-dumping complaint against the Japanese government and semiconductor companies, pressuring Japan’s semiconductor industry. The Reagan administration then weakened Japanese companies’ competitiveness by overvaluing the yen through the Plaza Accord. The following year, the U.S. and Japan signed a semiconductor agreement. After this agreement, Japan gradually stepped down from the semiconductor throne.

Just like then, in 2024, the U.S. government and companies are intensifying their offensive. What started seemingly targeting China is now expanding its scope. Under the ‘America First’ policy, the full-scale offensive spares no allies.

However, South Korea is still unprepared to enter the war. The so-called K-Chips Act, a tax credit for semiconductor facility investment companies under the ‘Restriction of Special Taxation Act’ amendment, is set to expire this year, but there has been no proper discussion about it. Professor Kwon Seok-jun of Sungkyunkwan University, author of ‘The Semiconductor Trilogy,’ said, “We need to be as meticulous as possible about protecting Korean interests and prepare scenarios not only for the current generation but for at least one generation ahead.”

The bigger problem is that, with about a month left before the general election, there is no strong political leader to drive this forward. While we hesitate and falter, the semiconductor war ignited by the U.S. is intensifying. It is still hard to predict the outcome, but one clear fact remains: the U.S. will not take care of our semiconductors just because we are allies. Wasn’t Japan an ally of the U.S. 40 years ago as well?

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