[The Editors' Verdict] Korean Semiconductors Trapped in the US-China Power Struggle

The semiconductor industry is paying close attention to the fact that Taiwan's TSMC, the world's number one foundry (semiconductor contract manufacturing) company, is expanding its production bases outside of Taiwan. Until last year, the overseas factories operated were limited to Nanjing and Shanghai in mainland China, but this year, starting with the operation of the first plant in Japan, the sequential construction of the second and third plants is expected to begin as early as the end of the year. The Phoenix plant in Arizona, USA, which began construction in 2021, is set to start operations next year, and once the construction of the first European plant in Dresden, Germany, is completed, it is predicted that by around 2028, overseas factories will account for more than 20% of TSMC's total production volume.

It is worth considering why TSMC is planting production factory flags in various parts of the world by tapping into the desires of countries to grow their semiconductor industries. In fact, Taiwan is already a region where the semiconductor industry and economic development are progressing steadily together, and it is no exaggeration to say that it has the optimal environment and policy system for foundry production.

There is also the background that TSMC executives have pointed out that building and producing semiconductors overseas costs much more than doing so in Taiwan itself, and have cautioned against being swayed by the subsidies offered by various countries. From a diplomatic perspective, there is concern that if there are many alternatives to semiconductors produced in Taiwan, the United States may not be willing to bear the risk of protecting Taiwan. This is in the same vein as the argument that TSMC's semiconductor factories in Taiwan serve as a strong shield defending against attacks from China.

Despite these risks, Taiwan has adopted a strategy of expanding production plants while strengthening stable customer acquisition and trust building. They decided to concentrate the production of core advanced process products, which have high concerns about technology leakage, within Taiwan, but to complement Taiwan's geopolitical instability with a thicker semiconductor defense shield by making the supply chain connections denser through diversification of production bases.

Korea's situation is quite different from TSMC, which is actively diversifying production bases. Samsung Electronics and SK Hynix have overseas production plants limited to the United States and China, where the hegemony war is intensifying. As the tensions between the two countries escalate, the position of Korean semiconductor companies, which are highly dependent on the US and China, is inevitably narrowing. Korean companies have had to be cautious of both countries over the past few years due to semiconductor regulatory measures that emerged whenever US-China tensions rose, and as a result, they had to respond by reducing the proportion of advanced products produced in Chinese semiconductor factories. The US is attracting semiconductor companies, including those from Korea, through subsidies under the CHIPS and Science Act (CSA), and with the Chinese government strongly opposed to this, the need to tread carefully between the US and China will only increase.

Is there a way for our semiconductor industry, which employs a different strategy from TSMC in terms of diversifying semiconductor production bases, to avoid being swayed by the US-China hegemony war? For now, the sure breakthrough is for Samsung Electronics and SK Hynix to concentrate advanced fabs applying ultra-fine processes in the semiconductor cluster in Yongin, Gyeonggi Province, to expand production volume and stabilize the supply chain. This is why the government must accelerate the construction of the semiconductor mega cluster, which has not gained momentum so far, by providing policy support such as infrastructure development, export expansion support, and strengthening the semiconductor materials, parts, and equipment (SoBuJang) and fabless (semiconductor design specialist) ecosystems.

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