Science Technology

South Korean Semiconductor Reaches Source Again

Korean semiconductor has a strong giant effect. Since 2018, Samsung semiconductor has surpassed Intel to become the first semiconductor manufacturer in the world. SK Hynix also performed well, with a revenue of $34.398 billion in 2021. It also purchased Intel’s NAND flash memory and storage business for $9 billion last year, staging a “snake swallowing elephant” incident. The importance of Korean semiconductors in the world is self-evident, but at the same time, Korean semiconductors are also facing their own crisis.
Since July 2019, Japan has imposed export restrictions on South Korean semiconductors, restricting some key semiconductor materials, including fluoropolyimide used in the manufacture of TV and smartphone panels, photoresist, the core material in the semiconductor manufacturing process, and hydrogen fluoride for high-purity semiconductors.
The restrictions imposed three years ago dealt a severe blow to South Korea, dragging its pillar industry, the semiconductor industry, into crisis. South Korea seeks survival in the crisis, and its dependence on Japan has decreased from 30.9% in 2019 to 24.9% in 2021.
After Biden’s visit to South Korea, two major companies in South Korea successively released news of their visits to various countries, ushering in a new wave of opportunities for the semiconductor industry in South Korea.
Cooperate door-to-door and consolidate the alliance
On May 20th, after arriving in South Korea, US President Biden first visited the semiconductor factory. He and South Korean President Yoon Sih Yueh jointly visited the Samsung Electronics Semiconductor Factory in Pyeongji, South Korea.
Samsung’s Pingze factory is said to be the world’s largest semiconductor factory. “There are few precedents for such an arrangement,” said the Korean Central Daily newspaper, which selected a local factory as the first stop for the US president’s visit. According to international public opinion, the United States takes this opportunity to “demonstrate its determination to restructure the chip supply chain around its own country” and “take South Korea as its main partner.”. After the Biden government took office, the demand for semiconductor repatriation to China became increasingly strong. The construction of an independent product chain in the United States is one of the government’s goals, and Samsung’s position here cannot be circumvented by the United States. Biden’s arrangement “reflects the status of the Korean chip industry” and once again clarifies that “Korean semiconductors are the core strategic assets that support the strategic value of the Korean US alliance.” The inspection of the factory by the Korean US leaders aims to highlight the image of the two countries as mutual semiconductor partners.
On May 31, it was announced that Samsung Electronics would cooperate with Intel to launch cooperation in multiple fields such as next-generation storage chips, system chips, wafer foundry, personal computers (PCs), and mobile devices.
After finishing his trip to the World Economic Forum in Davos, Switzerland, Intel CEO Pat Kissinger traveled to Seoul, South Korea, and held a meeting with the actual head of Samsung Electronics, Li Zairong. The participants in this conference also included co executive Qing Guixian, who is in charge of Samsung’s chip business, Lu Taiwen, who is in charge of Samsung’s mobile department, and senior executives in Samsung’s storage chip, processor, wafer foundry, and other businesses.
Samsung’s collaboration with Intel in the PC business can ensure Samsung’s dominance in the new generation of DRAM specifications. Intel, on the other hand, focused on Samsung’s OEM business, taking the lead in breaking the trend of pure competition among the three companies, first attracting TSMC and handing over OEM orders for its GPUs and some CPUs to TSMC. Now Intel has reached a partnership with Samsung wafer foundry. TSMC remains the world’s largest foundry. Currently, Samsung’s wafer foundry capacity is less than a quarter of that of TSMC. Therefore, Samsung is actively accelerating the expansion of its capacity, and its Pingze P3 factory integrates storage chip manufacturing and wafer foundry.
Take the initiative to prepare for a rainy day
According to South Korean media, Samsung and SK Group are seeking to strengthen cooperation with Japanese companies in semiconductor materials and semiconductor raw materials to ensure supply. In 2019, the import of semiconductor materials from South Korea was restricted by Japan, which did not cut off the supply, but at the cost of a premium and increasing the approval process. According to foreign media reports, Li Zairong and others went to Japan to strengthen ties with Japanese semiconductor suppliers and ensure a stable supply of semiconductor materials and production equipment in the face of increasing global uncertainty. SK Hynix has extensively established factories in Wuxi, China, and other places, attempting to replace Japanese imports with hydrogen fluoride produced in China, and has now achieved good results. Today, the global semiconductor supply chain is unstable, which may be the way for Samsung and SK to stand on their own.
In semiconductor manufacturing, although Japan’s competitiveness is no longer comparable to that of the past, they still have several of the world’s top suppliers of manufacturing equipment and raw materials, and still have a strong influence in the semiconductor field. For example, Japan dominates the hydrogen fluoride market. If Samsung has difficulty purchasing more hydrogen fluoride from Japanese suppliers, Samsung may be forced to reduce production. As a result, Samsung is also making two pronged preparations. Li Zairong asked Samsung supplier executives to take measures to alleviate export control issues, such as supplying Samsung with semiconductor materials affected by export controls from factories outside Japan.
With Samsung and SK Group successively announcing investments of over 100 billion US dollars in the next five years, the semiconductor field is the focus of investment, and the demand for related equipment and raw materials will significantly increase. Ensuring stable supply is crucial for their investment in semiconductor.
Li Zairong, the actual controller of Samsung Group, visited Asme, the Dutch lithography machine manufacturer, and public opinion said that he was trying to ensure the supply of high-end lithography machines. Samsung previously announced that it would invest $360 billion in the semiconductor and biopharmaceutical fields within five years and would import EUV lithography machines as soon as possible.
As mentioned earlier, TSMC has overtaken Samsung in OEM, so Samsung has launched the “2030 Plan” aimed at achieving anti-superiority to TSMC by 2030. This trip to ASML is to purchase the next generation EUV lithography machines from ASML. At the same time, it is pointed out that Li Zairong has also gone to Europe to purchase TSMC’s customer Enzhipu, and Infineon and ARM are also the targets of Samsung’s cooperation. It is not difficult to see that Samsung not only wants the latest ASML devices, but also officially launches an impact on TSMC.
In the past, South Korea’s “official university research” has trained a large number of talents for South Korea, including Sungkyunkwan University, which has brought a large number of engineers to South Korean enterprises. However, like other countries in the world, the chip manufacturing industry in South Korea also faces talent shortages. Samsung Electronics and SK Hynix have recommended that South Korea support the cultivation of chip related talents by providing subsidies for local universities to develop semiconductor related colleges, establishing talent cultivation projects, and providing scholarships for students in related majors. The proposal of Samsung Electronics and SK Hynix has also been recognized by the Korean government. The Ministry of Science, Technology, Information and Communications of Korea has prepared to cultivate more than 3000 semiconductor professionals by 2027 through the establishment of new semiconductor research institutions, school-enterprise cooperation, talent exchange, and other means.
South Korea also plans to establish new semiconductor research institutions in four top research institutions, namely, the Korean Academy of Science and Technology, the Kwangju Academy of Science and Technology, the Daegu Gyeongbei Academy of Science and Technology, and the National Ulsan Academy of Science and Technology, to cultivate more than 200 talents in the semiconductor field each year. South Korea plans to cultivate semiconductor talents through the establishment of new semiconductor research institutions, and increased cooperation between schools and enterprises for master’s and doctoral programs.
This year is the year of South Korea’s general election. On May 10th, the new President of South Korea, Yoon Sih Yueh, was sworn in. Yin Xiyue’s government has shifted economic dominance from the government to enterprises and citizens, hoping to achieve a virtuous cycle of growth and welfare equity through the use of folk creativity and vitality. Yin Xiyue’s government plans to actively support industries such as semiconductors, batteries, and artificial intelligence that are directly related to economic security, and cultivate them into future strategic industries to ensure their international competitive advantage. To this end, South Korea will lay the foundation for the growth of national cutting-edge strategic industries such as semiconductors and batteries. Measures include actively providing incentives for investment in semiconductor equipment and simplifying licensing procedures; The “National Advanced Strategic Industries Law” has been officially implemented to provide comprehensive support for the ecology, research and development, and international cooperation of strategic industries such as semiconductors and batteries.
Korea Semiconductor Multi-Factor Rescue
As neighboring countries, South Korea and Japan have inextricably linked relations in the semiconductor field. Studying the development path of the two countries is very important for South Korea.
The semiconductor industry in South Korea started more than a decade later than in the United States and Japan. When the United States and Japan entered the era of transistor integrated circuits in the early 1960s, the entire national economy of South Korea was still on the brink of collapse.
Therefore, unlike Japan, which has adopted strict trade protection policies to protect its domestic electronic industry from the beginning, the Korean government has adopted a “borrowing doctrine” at the beginning of its development. For this reason, South Korea has agreed to a series of unequal market rules, which has led to the explosion of South Korean chip factories.
Unlike Japan, the highly centralized chaebol system played a key role in the development of Korean semiconductors. From the beginning of its development, the Korean government has proposed the economic development model of “government+big consortia”, and led the chaebols such as LG and Hyundai to establish the Korean Electronics Industry Alliance, using policy guidance to leverage the economic influence of giants. With Japan’s DRAM overcapacity, trade conflicts between Japan and the United States have erupted, and global DRAM prices have plummeted. In the semiconductor trade agreement, Japan promised to reduce production capacity and exports to boost prices, but the results were not obvious. This has given South Korea a gap period, and Samsung has seized this opportunity to successfully turn around and soar all the way. Finally, South Korea established its world leading position in the semiconductor field by acquiring the technology of companies from the United States and Japan.
Although Samsung and Hynix produce most of the world’s memory chips, South Korea lags behind in the field of logic chips. The economy of giants and chaebols has hindered South Korea’s technological innovation. Therefore, South Korea has proposed to introduce more foreign investment. The Dutch semiconductor company ASML plans to invest more than $200 million to establish a training center in Huacheng. The American semiconductor company Lam Research has also said to double its production capacity in South Korea. German Merck will start producing chemical mechanical polishing (CMP) slurry in Korea, and delivery is expected to begin in the first half of 2022. The Ministry of Industry, Trade and Resources of South Korea stated that if the plan is successfully implemented, the annual export value of South Korean chips will double from $99.2 billion last year to $200 billion by 2030.
South Korean semiconductor arrows have been launched.