There is a growing call for South Korean semiconductor companies to strengthen their position within the global ecosystem to maintain their competitive edge. Concerns have been raised about potential technology leaks and domestic job losses as Samsung Electronics and SK Hynix expand overseas, but experts emphasize that strategic territorial expansion is urgent.
According to industry sources, TSMC announced in January plans to increase its overseas production base from 15% in 2030 to 20% by 2036. Micron has also diversified its key production lines beyond the U.S. to locations in Taiwan, Singapore, and Hiroshima, Japan.
In contrast, most of South Korean companies' core memory production lines remain concentrated domestically. While Samsung's advanced foundry in Taylor, Texas, and SK Hynix's packaging facility in Indiana are underway, overseas memory production sites are limited to general products and backend processes in Xi'an and Wuxi, China. The critical front-end production for next-generation advanced memory processes is still entirely handled by domestic campuses in Pyeongtaek, Icheon, and Yongin.
Plans for overseas expansion by these companies are also hindered by concerns from the government and political circles. In June, then-Prime Minister Kim Min-seok stated, "The priority should be finding ways to make it work in Korea, rather than saying 'if it doesn't work in Korea.'" He criticized SK Group Chairman Chey Tae-won’s comments about considering overseas investments due to challenges like power and water shortages in Korea.
However, experts warn that an approach characterized by 'semiconductor isolationism,' which insists on domestic production citing potential technology leaks, could weaken competitiveness. They argue that such a stance may lead to isolation during the global supply chain restructuring.
According to the Korea International Trade Association and the Bank of Korea, the domestic localization rate of semiconductor equipment is only about 20%, with reliance on imports from the U.S., Japan, and the Netherlands exceeding 70% for key equipment. In a situation where it is difficult to independently establish the entire process of materials, equipment, and packaging, simply increasing domestic fabs without collaboration with global hubs has clear limitations.
Yoon Jeong-hyun, a senior researcher at the Institute for National Security Strategy (INSS), explained, "If the state and companies become overly nationalistic about technology, they will prioritize strengthening domestic capabilities over cooperation, which risks leading to exclusive protectionism."
This is also a timely opportunity for South Korean semiconductor companies to boldly expand their overseas territories. As of the first half of this year, the combined cash and cash-equivalent assets of Samsung Electronics and SK Hynix approached 278 trillion won, marking the highest level of financial resources available. Unlike in the past, when financial difficulties hindered overseas investments, they now have the capacity to secure global hubs.
Major countries are also extending significant incentives. The U.S. is actively attracting advanced fabs with high tariffs and subsidies, while Japan is offering cash support covering up to 50% of factory construction costs to draw global semiconductor companies.
Ahn Gi-hyun, executive director of the Korea Semiconductor Industry Association, stated, "Expanding territories by leveraging overseas subsidies and favorable location conditions is a strategy to enhance global market dominance, not a risk of technology leakage. It is time to make policy decisions to break free from the frame of protectionism and strengthen ties with the global ecosystem."
* This article has been translated by AI.
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