History does not offer the same opportunities to every nation. Some remain on the periphery for centuries, while others miss critical chances and decline. Conversely, some countries seize pivotal moments to rise to the center of world history. South Korea belongs to the latter group.
After its liberation in 1945, South Korea emerged from the devastation of the Korean War in the 1950s, overcoming poverty through industrialization in the 1960s and 1970s. By the 1980s and 1990s, it had reached the threshold of developed nation status through democratization and globalization. Since the 2000s, South Korea has grown into a technology powerhouse, drawing global attention with its advancements in semiconductors and information and communication technology (ICT). Now, South Korea stands at another historical crossroads.
The local elections have concluded, and the administration of Lee Jae-myung is preparing for its second term. A change in the Prime Minister is being pursued, and both ruling and opposition parties are discussing a reshuffle of their leadership structures. While political changes are underway, a more significant transformation is occurring on the global stage.
The United States and China are betting their national futures on the competition for artificial intelligence (AI) supremacy. The AI revolution, led by companies like NVIDIA, is shaking up industrial structures, with semiconductors, data centers, and power grids becoming new benchmarks for national competitiveness. Low birth rates and an aging population are straining economic and welfare systems, while the global order is undergoing massive changes characterized by supply chain restructuring and technological blockades. South Korea is at the center of the most significant structural changes since its industrialization.
The world is currently experiencing the most significant civilizational shift since the Industrial Revolution. AI is not merely a new technology; it represents a new industrial order and a new operating system for civilization. Just as the steam engine sparked the Industrial Revolution, electricity ushered in the mass production era, and the internet led to the information revolution, AI is reshaping intellectual labor and the very fabric of societal governance.
The criteria for national competitiveness are also changing. In the past, territory, population, and resources were paramount. Later, manufacturing, finance, and information technology defined national strength. Now, AI, data, semiconductors, energy, and the talent to utilize these resources will determine a nation's future. This shift presents both a crisis and an opportunity for South Korea.
The essence of the AI revolution is the semiconductor revolution. Today, the global AI industry operates on NVIDIA's GPUs and the memory semiconductors produced by Samsung Electronics and SK Hynix. Notably, high-bandwidth memory (HBM), a critical component of AI servers, has emerged as a strategic asset that determines AI performance. If AI is the brain, memory is its memory; just as a brain cannot exist without memory, AI cannot function without it.
South Korea is at the heart of the global memory semiconductor market. While the U.S. leads in AI platforms, it relies on South Korea for advanced memory technology. China is pushing for AI self-sufficiency but still faces limitations in the advanced memory sector. Europe is ahead in discussions on AI regulation and ethics but lacks production capacity. Thus, South Korea occupies a central position in the key supply chains of the AI era.
The recent rise in the KOSPI index is no coincidence. Global capital is beginning to reassess Samsung Electronics and SK Hynix not merely as semiconductor companies but as essential infrastructure firms for the AI era. The term 'Korea Discount' was once common, but the global market is now recognizing South Korea's strategic value.
However, it is crucial not to fall into the trap of thinking that semiconductors alone will secure the future. AI data centers consume vast amounts of electricity. As the AI industry grows, the importance of power grids and the energy sector will only increase. Robotics, autonomous driving, biotechnology, defense, smart cities, and manufacturing innovations will ultimately operate within the AI ecosystem.
South Korea must transition from a semiconductor powerhouse to an AI powerhouse, and from an AI powerhouse to a physical AI powerhouse. It should lead the manufacturing sector's AI transformation by combining its world-class manufacturing competitiveness with AI. This will be a central task for South Korea's industrial strategy over the next decade. The industrial landscape must be reshaped.
The same applies to politics. The essence of politics is not power; power is merely a means for the people. Following the local elections, both ruling and opposition parties face demands for change. Both the victorious and the defeated have heard the public's warning. Citizens desire solutions to problems rather than political strife and seek governance capabilities over partisan logic. What South Korean politics must do is not to undermine opponents but to design the nation's future. National competitiveness in the AI era cannot be built solely by businesses; government, the National Assembly, and local governments must work together. The political landscape must be restructured.
Education is an even more fundamental issue. South Korea has grown through the power of education. Its world-class educational fervor has been a driving force behind industrialization, democratization, and informatization. However, success formulas are not eternal. The education system has produced individuals who can quickly find answers, but AI can find answers much faster than humans. Generative AI can summarize papers, write code, and analyze complex documents. Competitiveness in the AI era lies not in finding answers but in the ability to define problems, design new solutions, and possess insights and creativity unique to humans. Education must shift from answer-oriented to solution-oriented, from rote memorization to creative thinking, and from competition-based to problem-solving-focused. Educational reform in the AI era is not a choice but a matter of survival. The educational landscape must be redefined.
The demographic issue is even more urgent. South Korea is becoming the fastest-aging country in the world. While the total fertility rate has rebounded, it remains among the lowest globally. Japan experienced low birth rates and aging before South Korea and invested vast budgets for decades but did not achieve the expected results. The lesson from Japan's experience is clear: birth rates respond to living conditions. The reasons young people delay marriage and childbirth are not solely financial; they also include job availability, housing, education costs, and labor conditions. In a country where young people cannot envision a future, a rebound in birth rates is unlikely. What is needed now is not just pro-natalist policies but a societal structure that allows youth to have hope. The issue of population decline is related; administrative, educational, and welfare systems designed for a growing population must be restructured to fit a declining one. The demographic landscape must be reshaped.
Energy is also a critical variable that will determine the nation's future. AI data centers and semiconductor factories consume enormous amounts of electricity. To become an AI powerhouse, South Korea must also become an energy powerhouse. A long-term national energy strategy must be redesigned to include nuclear power, renewable energy, transmission and distribution networks, and energy storage systems. AI cannot exist without energy.
Ultimately, South Korea faces a singular challenge: to reshape the industrial landscape, political landscape, educational landscape, demographic landscape, and energy landscape. This is not merely a matter of policy adjustment; it requires a comprehensive redesign of the national system. The true challenge for the second term of the Lee Jae-myung administration and the new Prime Minister's regime lies here. A country that allows policies to waver with each change of administration and alters its national vision with each change of ministry cannot lead in the AI era. What is needed now is not a five-year national agenda but a grand national strategy that looks ahead 20, 30, or even 50 years.
Industrialization saved South Korea from poverty, and democratization transformed it into a developed nation. Now, the national transformation in the AI era is becoming a task that will determine the next century for South Korea. History does not grant opportunities to every nation. However, South Korea is facing yet another chance. The next five years will not merely determine the success or failure of any administration; they will shape the nation's destiny for the next 50 years. What is needed now is not political strife but design. It is time to reshape South Korea's future.
* This article has been translated by AI.
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