South Korea Eyes $13.9 Billion KSMC Project to Outpace TSMC and Reinvent Semiconductor Innovation

South Korea is developing KSMC with a $13.9 billion investment to challenge TSMC and foster innovation across its semiconductor ecosystem.

KSMC Proposal Aims to Strengthen South Korea's Semiconductor Sector

Korea Semiconductor Manufacturing Company (KSMC) is a possible name for a government-funded contract chipmaker being considered by the South Korean government, according to The Korea Biz Wire. This program was suggested by academics and professionals in the field.

The head of the semiconductor industry in South Korea, Ahn Ki-hyun, has demanded a substantial financial commitment from the government. If KRW 20 trillion ($13.9 billion) were invested in KSMC today, experts predict that by 2045, the economy would have benefited by KRW 300 trillion ($208.7 billion). But if that's enough money to start a chipmaker is the main concern.

Addressing Concerns with Publicly Funded Chipmakers

The ability of publicly-funded companies like KSMC to create lucrative advanced manufacturing technologies and secure sufficient client orders is another area of worry. Korea actually has a demand for more fabless software developers as well as semiconductor manufacturers.

The idea was first presented at a conference put on by the Korean National Academy of Engineering (NAEK). A lack of mature process technologies and an excessive dependence on Samsung's advanced nodes under 10 nm are two examples of the structural deficiencies that the plan seeks to solve.

South Korea's Challenges Compared to Taiwan's Semiconductor Model

In contrast to Taiwan, where TSMC's sophisticated process technologies are supplemented by UMC and PSMC, which concentrate on mature and specialty nodes, smaller system semiconductor enterprises in Korea face challenges thriving because of a lack of manufacturing diversity.

When it comes to memory, Korea is unrivaled. But in terms of logic process technology and chip designers, it lags significantly behind Taiwan, and things aren't looking up anytime soon.

Inadequate investment attractiveness, talent shortages, stringent restrictions, a growing technological gap with foreign competitors, and slow growth in fabless businesses are some of the major obstacles that the report identifies as affecting Korea's semiconductor industry.

Proposals to Strengthen South Korea's Semiconductor Sector

Reusing Samsung's older fabrication facilities for legacy process technologies was suggested by SK Hynix's CEO. Providing financial incentives like subsidies and tax credits and stepping up research and development were two of NAEK's main demands. Reducing regulatory restrictions, particularly on working hours, is another approach.

Engineers at TSMC have stated in public on many occasions that working longer hours allows for the quick creation of breakthrough process technologies, Tom's Hardware shares.

Morris Chang was approached to help start TSMC by Executive Yuan, the government of Taiwan. The government saw the promise of the semiconductor business in the 1980s and wanted to build it in Taiwan. Not everyone knows this, but it is true. There may be other Taiwanese semiconductor manufacturers, but the flagship foundry plays a crucial role in the industry as a whole.

More than 250 fabless firms have thrived in Hsinchu Science Park alone, thanks to Taiwan's semiconductor ecosystem, which NAEK has taken cues from.

The Korean government might learn from this accomplishment and help smaller companies compete with tech behemoths like Samsung and SK Hynix by establishing KSMC and providing financial support.

Large firms already incur additional costs when sourcing components from Japan and Taiwan; CEO Kwak No-jung of SK Hynix suggested a solution: actively helping smaller suppliers of materials, parts, and equipment.