Samsung Veteran Warns of Korea’s Risk in Global Chip War, According to Bloomberg

Title: A Strategic Shift for South Korea’s Semiconductor Industry

In her three decades at Samsung Electronics, Yang Hyang-ja has played a pivotal role in the company’s transformation into a leader in global memory chip production. Now, she is confronting a broader challenge: securing South Korea’s relevance amidst the escalating semiconductor rivalry between the US and China.

Having climbed the ranks from a research assistant to the head of Samsung’s vital memory chip division, Yang is now spearheading a national initiative aimed at fortifying South Korea’s domestic chip industry. Her work is increasingly critical as major economies like the US, China, and Japan invest heavily in their semiconductor ecosystems, raising questions about South Korea’s future in this crucial sector.

Yang emphasizes the stakes involved, noting, “This is a matter of national security.” Her sentiments mirror those of policymakers in both Washington and Beijing, who are channeling resources and support to enhance their capabilities in microchip production, which underpins advancements in artificial intelligence, the metaverse, and military technology.

In a December interview, Yang stated, “We’re in a chip war. Technological supremacy allows our nation to lead in security-related matters, including diplomacy and defense, free from outside influence.”

As chair of a 13-member special committee formed by President Yoon Suk Yeol’s ruling party, Yang advocates for strong governmental intervention to enhance South Korea’s standing in the $550 billion global semiconductor market. She has joined a growing number of global leaders who endorse protective measures in technology, especially after the pandemic underscored reliance on international supply chains for critical electronic components. Yoon has expressed support for Yang’s initiatives aimed at bolstering the country’s semiconductor industry, which includes key players like SK Hynix.

Despite her efforts, progress has been limited. Recently, the South Korean parliament passed a local version of the US Chips Act, which Yang had championed. This legislation streamlines the factory approval process in metropolitan areas and increases the number of tech-focused educational institutions. However, the approved tax incentive of 8% for large firms investing in semiconductor production falls short of Yang’s proposed 20% to 25%.

Yang argues that these measures are insufficient compared to the substantial subsidies being offered by other nations. She has criticized her fellow lawmakers for allowing immediate political concerns to overshadow long-term strategic goals. Some legislators worry that generous inducements could harm government finances and primarily benefit large corporations.

Yang warns that Korean companies might relocate their major production facilities to the US, taking their top talent with them. Samsung is considering a $17 billion semiconductor plant in Texas and has hinted at an investment nearing $200 billion in Austin and Taylor.

However, Yang sees a unique opportunity for South Korea. The global semiconductor landscape is shifting, particularly with Taiwan’s dominance, being home to Taiwan Semiconductor Manufacturing Co., the largest supplier of cutting-edge chips. This has led to calls for diversifying production away from Taiwan due to geopolitical concerns.

“Samsung is the only company in the world that can fill in for TSMC,” Yang asserted, emphasizing the potential for South Korea to position itself advantageously in the industry.

Yang, who entered politics in 2016 encouraged by former President Moon Jae-in, is currently an independent lawmaker, having left the Democratic Party amid scrutiny over her handling of a sexual assault case involving an aide. An investigation found no charges against her.

As tensions between the US and China escalate, South Korea faces difficult choices regarding chip production collaboration. Both the US and China are pressing for expanded partnerships with South Korea. However, the South Korean government has been cautious about publicly aligning with US export restrictions directed at China.

This nuanced position underscores the urgency for South Korea to enhance its technological capabilities domestically to avoid becoming overly reliant on foreign powers. Yang believes it is crucial to incentivize local companies to expand production at home rather than abroad to retain talented workers.

“How else would our country survive?” she questioned. “It would become a new technological colony.”