Korea’s chipmakers face two key challenges: the rise of Chinese competition and the transition to clean energy. In the past year, the CHIPS and Science Act and U.S. semiconductor export controls have been at the forefront of the discussion surrounding the future of Korean semiconductor production in China. However, the growth of a competitive Chinese semiconductor industry and the need for production based on renewable energy sources could be just as significant for Korean chipmakers.
YMTC, a Chinese memory chip firm, is a close competitor to Samsung and SK hynix. Last year, Apple considered procuring up to 40 percent of its NAND chips from YMTC, due to the quality and price of their product. However, U.S. export controls and political pressure prevented the agreement from going through. China has since provided YMTC with $7 billion in subsidies, allowing the company to acquire the necessary equipment for a new plant.
On the other hand, the increasing focus on reducing carbon emissions could be a problem for Korea’s semiconductor industry. Major tech firms, such as Apple, Dell, Google, Microsoft, and Amazon, are all taking steps to reduce their scope 3 emissions. This could put pressure on Samsung and SK hynix to source chips from their plants abroad with better access to clean energy.
The future of Korea’s semiconductor industry will depend on improved coordination with the U.S. and EU on export controls and subsidies as well as increased investment in clean energy. These two issues must be taken into consideration when looking at the long-term viability of Korea’s chipmakers.