The Semiconductor War: Korea’s in a Cold Sweat

Korea may have to compete with the U.S in the semiconductor business, as competition regarding the high-tech weapon component and conflict between the U.S. and China both escalate. We need to stop focusing solely on real estate and the election; let’s work on the right thing.

“We should be thankful to Trump.”

One official we met during the interview explained that Korea’s semiconductor industry has been growing thanks to the United States. The semiconductor industry originated in the U.S., with the first dynamic random-access memory. In 1980, when Japan’s semiconductor industry arose, America put the brakes on Japan through the Plaza Agreement and the U.S.-Japan Semiconductor Agreement. It was Korea who seized the opportunity while Japan hesitated.

After Korea became a semiconductor powerhouse, China’s semiconductor industry’s sudden rise became the greatest threat to Korea. However, President Donald Trump started attacking China by blocking the export of high-tech semiconductor equipment to China. The semiconductor industry cannot thrive without the necessary manufacturing equipment. Again, Korea benefited.

The reason the U.S is so sensitive to semiconductor technology is that it is at the core of the state-of-the-art futuristic weapons. Semiconductor technology is essential to maintain America’s national security and military dominance. In fact, over 10,000 semiconductors are used to make a satellite. In the end, semiconductors can make or break the competition over weapons and national power. That is why the Presidential Council on Science and Technology strongly suggested countermeasures in response to the sudden rise of China’s semiconductor industry; the council saw China’s semiconductor industry as weakening America’s economic power and causing a serious national security crisis.

President Joe Biden recently announced plans to invest $50 billion into semiconductor manufacturing development, as part of his large-scale infrastructure investment plan. Prior to that, Biden ordered research on the 100-day supply chain system of four items, including semiconductors, batteries, rare-earth elements and medical supplies. That means Biden is determined to strengthen the U.S semiconductor industry and to pursue value chain internalization. Specifically, Biden will try to reduce consignment production of memory system semiconductors, since the U.S. highly depends on South Korea and Taiwan to produce these items.

The White House is planning to hold a countermeasure meeting about the issue of short supply of semiconductors with Samsung Electronic executives on April 12. It is also unusual that Intel announced it would build a $20 billion semiconductor factory in Arizona. Intel must have made the decision to revive its long-neglected business because the U.S government promised support. Intel CEO Pat Gelsinger declared that “Intel is back.”

The Taiwan Semiconductor Manufacturing Company and Samsung Electronics are two top global companies in the semiconductor business. Intel announced that it would revive its semiconductor business even though these two companies are already building factories in the United States. Micron Technology is also planning to merge with Japan’s Koxia Holdings Corporation (formerly Toshiba Semiconductor). Now Korea must compete with the U.S., the Korea’s benefactor, to survive in this business. Not to mention that the U.S., China and European countries are busy starting a semiconductor war, while our government seems to be calm.

Semiconductors are the star of Korea’s trade exports, accounting for 20% of export profits. Last month, the semiconductor export market was worth 11 trillion won. In the era of the fourth industrial revolution, we cannot ignore semiconductors, whatever we do. It is clear this market is going to grow. The recent suspension of automobile production caused by the lack of semiconductor supplies is only the beginning. Semiconductors could determine the nation’s future competitive power and its destiny. The U.S., if it wants, can shake our entire economy like it did with Japan and China. We should be sweating by now.

Furthermore, recent conflict between the U.S and China seems to have accelerated. The U.S. is attacking China with demands for greater democracy and human rights in coordination with U.S. allies.

China threatens to seek revenge against countries that align with the U.S. as much as it threatens the U.S. It is China’s sophistry saying that the friend of its enemy is China’s enemy. We have a perplexing situation where we cannot make friends with any side.

Korea’s economy faces a long road ahead and national security is on a razor’s edge, but we are distracted by other matters, such as real estate and elections, and cannot find the way out. We are a big fish in a small pond that cannot see the big picture when it comes to world affairs. If our semiconductor industry is unstable, we cannot guarantee our country’s future — the country that has been standing firm thanks to the hard work of many entrepreneurs and laborers under dysfunctional Korean politics. The election is over. It is time to focus again.