Samsung Foundry is a major chip manufacturing company, and Korea Bizwire reported that the South Korean government is considering establishing a government-funded contract chip manufacturer, tentatively called Korean Semiconductor Manufacturing Company KSMC. Industry experts and academics have proposed this initiative.
Ahn Ki-hyun of the Semiconductor Industry Association called for long-term investment by the government. Experts predict that a 20 trillion won ($13.9 billion) investment in KSMC could bring economic benefits of 300 trillion won ($208.7 billion) by 2045. But the big question is whether $13.9 billion is enough to start a chipmaker. Another concern about publicly funded companies like KSMC is whether they can develop advanced manufacturing techniques and get enough customer orders to make a profit. It turns out that South Korea needs more fabless software developers in addition to semiconductor manufacturers.
The proposal was introduced at a seminar hosted by the National Institute of Engineering of Korea (NAEK). The plan aims to address structural weaknesses in the industry, such as Samsung’s overreliance on sub-10nm advanced nodes amid a lack of mature process technology. Small system semiconductor companies struggle to grow because South Korea lacks the manufacturing diversity seen in Taiwan. In Taiwan, companies like UMC and PSMC, which focus on mature and specialized nodes, complement TSMC’s advanced process technology.
South Korea is the world’s largest memory manufacturer. However, China lags far behind Taiwan in terms of logic process technology and chip designers, and the situation has not improved. According to the report, the main challenges facing South Korea’s semiconductor industry include a widening technology gap with international competitors, lack of investment attractiveness, slow growth of fabless companies, lack of human resources, and restrictive regulations. It is said that it will be done. Experts attending the seminar emphasized the need to urgently address these issues in order to maintain South Korea’s global leadership in the semiconductor field.
SK Hynix’s CEO proposed reusing Samsung’s old factories for legacy process technology. NAEK called for increasing research and development efforts and providing financial incentives such as subsidies and tax credits. Other proposals include reducing regulatory burdens, particularly regarding working hours. TSMC engineers have stated publicly on numerous occasions that extended working hours will allow for the rapid development of advanced process technology.
Not everyone knows, but Morris Chan was instrumental in founding TSMC in the 1980s, when he was hired by the Executive Yuan of the Taiwanese government, which recognized the potential of the semiconductor industry and wanted to establish it domestically. I received an invitation. Although TSMC is not Taiwan’s only semiconductor manufacturer, its flagship foundry is fundamentally important to Taiwan’s semiconductor ecosystem.
NAEK’s efforts are inspired by Taiwan’s semiconductor ecosystem, which has enabled more than 250 fabless companies to thrive in Hsinchu Science Park alone. By establishing KSMC with government support, South Korea could replicate this success and provide small and medium-sized enterprises with the resources to grow alongside industry giants like Samsung and SK Hynix. SK Hynix CEO Kwak No-jung proposed directly supporting small suppliers of materials, parts and equipment, which currently have to source many materials from Japan and Taiwan. This would certainly be a benefit to large companies, which would mean additional costs.
KSMC’s proposal represents South Korea’s ambition to secure its place in the global semiconductor race while addressing fundamental weaknesses in the chip sector. Experts believe that by focusing on timely investment and ecosystem growth, South Korea can strengthen its competitiveness and generate significant economic benefits in the long term.
