Seoul, South Korea – The Korean Academy of Engineering's Semiconductor Special Committee has sounded the alarm on the South Korean semiconductor industry, calling for a government-led initiative to establish a "KSMC" ecosystem to compete with Taiwan's dominant TSMC.

In a research presentation held on December 18th at the Shilla Hotel in Seoul, the committee emphasized the urgent need to revitalize the nation's semiconductor industry. The committee, co-chaired by SK hynix CEO Kwak No-jung and Seoul National University Professor Lee Hyuk-jae, was formed in February to analyze the current state of the Korean semiconductor industry and propose solutions. This marked the first time the academy has issued recommendations specifically for the semiconductor sector.

Kwon Seok-jun, a professor of chemical engineering at Sungkyunkwan University and a member of the committee, argued that the South Korean government should play a pivotal role in fostering a robust system semiconductor ecosystem, encompassing foundries, fabless companies, and materials, parts, and equipment suppliers. He proposed the acronym "KSMC," mirroring TSMC, to represent this government-led initiative.

"TSMC received substantial government funding during its early stages," Kwon said. "South Korea should follow suit by investing heavily in research and development, establishing fabrication plants, building infrastructure, and training talent." He estimated that an initial investment of 20 trillion won would be required to kickstart this initiative, which could yield economic benefits of 200 trillion won within a decade and 300 trillion won over two decades.

The committee also highlighted the importance of restoring manufacturing competitiveness. Co-chair Lee Hyuk-jae noted that South Korea's once-dominant memory technology is now facing increased competition, and the nation's work ethic has waned. He criticized the 52-hour workweek policy, arguing that it hinders productivity and innovation.

Furthermore, the committee advocated for significant government investment in the "mega cluster" being developed in Yongin and Pyeongtaek, where major Korean semiconductor companies are concentrating their operations. Ahn Ki-hyun, executive director of the Korea Semiconductor Industry Association, estimated that the mega cluster would require a total investment of 1,000 trillion won over the next two decades. He urged the government to contribute at least 30% of this amount.

The committee's recommendations underscore the growing urgency for South Korea to bolster its semiconductor industry amid intensifying global competition. By fostering a strong domestic ecosystem and addressing challenges such as labor regulations and funding, the country aims to regain its position as a leading player in the semiconductor market.