Korean Media: Korea's Obsession with Memory Chip Boom Risks Turning It into Taiwan's Contract Manufacturer

IMF forecasts indicate that in five years, South Korea’s per capita GDP will fall behind Taiwan’s by over USD 10,000. In 2025, South Korea’s per capita GDP is projected at USD 36,227—22 years after being surpassed by Taiwan (USD 39,489). By 2031, South Korea’s per capita GDP is expected to reach USD 46,000, while Taiwan’s is forecasted to hit USD 56,100, further widening the gap. The divergent fortunes stem from competitiveness in the semiconductor industry—the pivotal sector for both regions. The advancement of the AI revolution is reshaping the global semiconductor landscape, shifting focus from memory chips toward contract manufacturing (foundry), with Taiwan centering on TSMC and capitalizing on this trend.

In the global foundry market in 2025, TSMC is expected to hold a 70% share—ten times that of Samsung Electronics (7%). In 2021, the gap between TSMC (53%) and Samsung Electronics (18%) was 35 percentage points; now it has nearly doubled. Currently, South Korea’s semiconductor industry remains heavily centered on memory chips. Nomura Securities has issued a warning: “In the AI era, if South Korea continues relying solely on memory chip exports, it risks becoming merely a contract manufacturer for Taiwan.”

Taiwan’s rapid progress is closely tied to comprehensive support provided by local governments. Authorities have actively built industrial ecosystems, developed water and power supply networks, and enacted legislation offering unprecedented tax incentives—up to 25% tax reduction for new investments.

In contrast, South Korea faces not only insufficient support but also mounting obstacles posed by politics and regulation, which have become major roadblocks to semiconductor development. Due to disputes over water infrastructure projects and various environmental impact assessment regulations involving local autonomous bodies, the plans for the Yangpyeong semiconductor cluster were delayed by five years before even beginning construction. Furthermore, rigid labor regulations such as the 52-hour workweek are weakening South Korea’s R&D competitiveness. Even more alarming, Samsung Electronics’ union has resorted to strike threats demanding KRW 40 trillion (approximately RMB 185.1 billion) in performance bonuses—a sum exceeding Samsung’s annual R&D investment (KRW 38 trillion, approximately RMB 175.8 billion).

Control over the AI-era chip market hinges on who designs the system and who assembles it. Design is dominated by U.S. firms like NVIDIA, while assembly is firmly in the hands of Taiwan’s TSMC. Under the current model, NVIDIA designs GPUs, TSMC manufactures them, and Samsung Electronics and SK Hynix supply HBM and DRAM memory chips.

Currently, the surge in demand for AI data centers has created scarcity in memory chips, temporarily elevating Samsung Electronics and SK Hynix to “supreme buyers” status. As a result, stock markets have soared, and the nation is immersed in an atmosphere of overnight wealth. But once the chip supercycle ends and memory prices decline, they could just as easily revert to being mere “suppliers.” The warning about falling into the role of Taiwan’s subcontractor while indulging in memory chip prosperity should be taken seriously by South Korea.

Source: Chosun Ilbo

Original article: toutiao.com/article/1862962338017280/

Disclaimer: This article reflects the personal views of its author