**[Opening: Reporter Jung Young-bin]**
Hello, this is Jung Young-bin. Welcome to News Prism, where we uncover issues in Korean society and analyze them from various perspectives to seek rational solutions. Let’s begin.
**[Reporter Jung Young-bin]**
Worldwide, the global semiconductor supremacy competition is intensifying. This is because high-performance semiconductors are essential for properly nurturing advanced future industries like artificial intelligence (AI), robotics, and the space industry. Especially since these advanced industries are directly linked to national security, countries worldwide are strategically developing the semiconductor industry through collaboration between governments and corporations. Semiconductors have now established themselves as a core strategic industry for nations, rather than just the business model of a single company.
**[Reporter Jung Young-bin]**
So how is the situation in our country? In the field of memory semiconductors, where we maintained overwhelming global leadership, China is now right at our heels, and the gap with Taiwan’s foundry led by TSMC is widening. It’s a crisis in every sense of the word. However, the semiconductor industry points to the “52-hour workweek” as a reason for this crisis. On the other hand, the labor community rebuffs this as a nonsensical excuse. Let’s first hear from the semiconductor industry’s perspective with Reporter Bae Jin-sol.
**[Unseen Semiconductor War… Reality for Our Companies? / Reporter Bae Jin-sol]**
**[Reporter Jung Young-bin]**
Then what is the stance of the labor community? They argue that if exceptions are made only for the semiconductor industry, the very principles and intentions of the 52-hour workweek could be compromised. They stress that there’s already a system in place allowing temporary extension of work hours in unavoidable circumstances, and that it should be fully utilized first. Reporter Kim Yu-a provides the report.
**[“Can’t Concede on 52-Hour Week”… Why the Labor Community Objects / Reporter Kim Yu-a]**
**[Moderator’s Corner]**
“In 2015, NVIDIA’s market capitalization was less than one-tenth of Samsung Electronics, and TSMC was about two-thirds. Today, while Samsung Electronics’ market cap remains the same as ten years ago when accounting for inflation, NVIDIA’s has increased 280-fold, and TSMC surpassed $1 trillion, ranking 10th globally.” This is a passage from the inaugural address of Ryu Jin, chairman of Poongsan Group, upon his re-election as president of the Federation of Korean Industries last February. It starkly illustrates the perilous situation facing the semiconductor industry, once a symbol of the Korean economy.
Our nation, once one of the world’s poorest due to colonial rule and the Korean War, was able to ascend to an economic power ranked in the top 10 globally due to exports. Especially since the mid-1990s, semiconductors have consistently been our top export product. During this period, the Korean semiconductor industry continuously grew, pushing Japan— which dominated the global memory semiconductor market in the 1980-90s—out of the top spot. The foundation was the significant technological gap symbolized by the term “ultra-gap” in semiconductor technology.
Yet, the Korean semiconductor industry now faces a red alert, standing on the brink of a precipice. While domestic semiconductor companies tread water, countries like the U.S., Japan, China, and Taiwan advance rapidly under significant national support. A shocking diagnosis has emerged that China’s technological level in the semiconductor sector has surpassed Korea’s. According to surveys by the Korea Institute of S&T Evaluation and Planning, experts evaluated that Korea’s basic technological capabilities in semiconductors lag behind China in all fields as of last year.
China’s rapid growth was possible due to comprehensive support at the national level. Announcing its ambition to achieve semiconductor industry independence for the first time in 2006, China laid out 16 major national projects for the next 15 years, including semiconductors. Since then, China has concentrated on nurturing the semiconductor industry at a national level, investing over 130 trillion won (about $115 billion) by last year. Particularly, despite the semiconductor downturn beginning in the second half of 2022, Chinese companies increased their investment in production facilities, growing rapidly. They are emulating the success formula of Korean firms that pre-emptively invested in times of crisis to overtake competitors. As a result, according to foreign reports, the market share of Changxin Memory Technologies in China’s DRAM market, once dominated by 80% by Korean companies, recorded a 5% market share last year, with an expected increase to 12% this year.
As Chinese semiconductors rapidly expand their market share, our exports are taking a direct hit. Although total exports saw a slight increase last month, semiconductor exports became negative for the first time in 16 months. The significant 15% decline in exports to China, which accounted for nearly half of memory semiconductor exports, had a considerable impact. The issue lies in continued astronomical investments by China in the HBM (High Bandwidth Memory) sector, where Korea currently leads. This could further shrink our semiconductor exports.
**[Reporter Jung Young-bin]**
Borrowing from the rapidly growing case of China, there is increasing demand that Korea also needs to consider national support measures. Naturally, the gaze shifts to the political sphere, where with the launch of the 22nd National Assembly, a special semiconductor law aimed at strengthening the competitiveness of the semiconductor industry is being introduced. However, disagreement over whether to make exceptions for the 52-hour workweek means the semiconductor special law remains stalled in parliament. This issue is covered by Reporter Choi Ji-won.
**[Semiconductor Law Held Up in Politics… When will a Consensus be Reached? / Reporter Choi Ji-won]**
**[Reporter Jung Young-bin]**
Along with the fierce chase from Chinese memory companies, tariff pressures initiated by Trump are factors increasing uncertainty in the Korean semiconductor industry. While exports to the U.S. aren’t significant, there is a heightened sense of crisis due to compounded adverse factors, including low-cost pressures from Chinese companies.
While there is a consensus on the crisis, there’s skepticism about whether effective responses are being implemented. Government solutions are slow due to leadership voids, and political discussions are stalled. Although the “K-Chips Act,” which includes tax credits for facility and technology investments, has passed, discussions of the semiconductor special law are halted with government-business dialogues stuck.
Losing even a little in the technology competition, a matter of life and death for nations and companies, equates to a predetermined exit from the market. Though a crisis can be an opportunity, there isn’t much time to convert this crisis into a chance. We must not forget the past when Japan’s once-dominant semiconductor industry faded under Korea and Taiwan. It’s time for not only companies and the government but also politicians to come together as a team to overcome the current waves.
That concludes this week’s News Prism. Thank you for watching.
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