[Insight & Opinion] The National Agenda Now Should Be Semiconductors, Not Pensions

Complacency in Politics Amid Technology Leaks and Crisis
Samsung's Technological Edge Is Not What It Used to Be
If Semiconductors Collapse, the Korean Economy Will Be Shaken

"The winter of memory semiconductors is coming" (Memory-Winter Is Coming). This is probably the most impactful metaphor in the history of the Korean stock market. On August 11, 2021, Morgan Stanley released a report parodying the famous line "Winter Is Coming" from the American drama Game of Thrones with this title. The report predicted that DRAM prices would start to decline by the end of the year, leading to a significant downgrade of the target prices for Samsung Electronics and SK Hynix. Foreign investors kept selling stocks, and the KOSPI fell below 3200.

The "semiconductor winter" incident gives one clear implication: semiconductors control the KOSPI, that is, the Korean economy. Less clearly but still possible is the hypothesis that semiconductors influence presidential elections. As the semiconductor crisis caused the KOSPI to fall, the Moon Jae-in administration, which had been doing well with hopes of a "20-year rule," went downhill and eventually lost power the following year.

As the famous book Chip War predicts, semiconductors are inseparable from "geopolitics," the combination of geography and politics. Semiconductors are directly linked not to a five-year administration but to the fate of Korea itself. Over the past several decades, Korea has been fortunate in the geopolitics of semiconductors.

Japan was a dominant player in the global semiconductor market in the 1980s. However, after the Plaza Accord with the United States, the yen's appreciation and U.S. pressure weakened Japan's advantage. Samsung Electronics seized this opportunity.

In 2015-16, U.S.-China relations were not that bad. The world's third-largest memory semiconductor manufacturer, U.S.-based Micron Technology, was on the verge of being sold to China due to management difficulties. However, the U.S. government and Congress blocked the sale. Had it been sold then, memory semiconductor dominance might have shifted from Japan to Korea and then to China. Just as Samsung Electronics surpassed Hitachi and Toshiba, Chinese companies like SMIC might have done the same.

Artificial intelligence and the Fourth Industrial Revolution are just beginning. Robots, autonomous vehicles, and the Internet of Things are increasing, human activity is expanding into space, and weapons are becoming more sophisticated. Although semiconductors are already widely used, their usage will explode in the future. It is no exaggeration to say that human progress goes hand in hand with semiconductors.

However, Korean semiconductors are currently in crisis. Samsung Electronics' stock price has fallen from the 80,000 won range to between 50,000 and 60,000 won. The slogans of "super-gap" and "world-class" seem hollow as technological capabilities are not what they used to be. In system semiconductors, Korea lags far behind Taiwan's TSMC. According to market research firm TrendForce, Chinese companies' memory market share will exceed 10% next year.

Just as semiconductors influence politics, the reverse is also true. Currently, politics is pushing Korean semiconductors into deeper crisis. Crimes involving the theft and illegal sale of advanced semiconductor technology to China are threatening Korean semiconductors at the doorstep. Yet, laws imposing severe penalties are still drifting in the political arena. They are postponed repeatedly due to peripheral issues and legal technicalities. Taiwan considers the leakage of national core technology as espionage. The U.S. can impose prison sentences up to 33 years and 9 months for technology leaks.

If semiconductors collapse, 20% of the Korean economy will collapse. An unprecedented crisis will come. Hope for the nation's future will disappear as well. It is hard to understand how a country that depends on semiconductors for national management can be complacent about semiconductor technology theft and semiconductor crises.

President Yoon Suk-yeol must realize that protecting and nurturing semiconductors is more urgent than pension reform. The latter is easier and more beneficial to the people. If the National Assembly continues to be lukewarm about preventing technology leaks as it has for years, the president must confront the legislature. Presidents are evaluated by their agendas. The national agenda now should be semiconductors, not pensions.

Heo Man-seop, Professor at Gangneung-Wonju National University

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