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Korea at a crossroads on the 40th anniversary of Tokyo Declaration

Korea at a crossroads on the 40th anniversary of Tokyo Declaration

Posted February. 08, 2023 07:52,   

Updated February. 08, 2023 07:52


Tuesday marks the 40th anniversary since the late Lee Byung-chull, the founder of the Samsung Group, declared advancement in the semiconductor business in Tokyo, Japan. When Samsung, a latecomer then, announced a large-scale investment in Very Large Scale Integration (VLSI), a state-of-the-art semiconductor technology, the world at the time ridiculed it as a “reckless undertaking” and “he’s a megalomaniac.” However, his call that “in difficult times, we must invest in future industries to survive,” is considered a decisive step in the right direction that changed the growth trajectory of the Korean economy.

Korea's semiconductor legend is the product of the persistent resolve of a business, a favorable international environment, and the government's proactive support. Samsung, which did not give up on technology development and continued pursuing it, succeeded in developing 64K DRAM for the third time following the U.S. and Japan in the same year that it declared advancement in the semiconductor industry. Since then, it has been on a winning streak, leaving “world first” records. In the 1980s, when the U.S. efforts to contain the Japanese semiconductor industry, which excelled the most, served as an opportunity for Korea to expand its market. The government also supported the industry with a long-term semiconductor fostering plan and offered assistance for the Samsung Giheung Campus plant site.

Forty years after the ‘Tokyo Declaration,’ the reality facing Korean semiconductors is treacherous at best. The supply chain crisis caused by the U.S.-China conflict is exacerbating uncertainties, and there is a prolonged 'semiconductor cold wave' due to sluggish global demand. Although Korea is maintaining its No. 1 spot in the memory market, including DRAM, the gap is narrowing. In addition, there are areas requiring improvement, for instance, we need to break away from excessive focus on memory semiconductors and enhance competitiveness in design, foundry (semiconductor consignment production), and systems. The rapid growth of the artificial intelligence (AI) market, which will begin with 'ChatGPT,’ can act as an opportunity to increase demand for semiconductors.

Countries around the world consider the semiconductor industry as the core of economic security and are competitively offering subsidies and tax benefits. On Tuesday, Japan announced that it would support one-third of semiconductor facility investment to companies on condition that they produce on their soil for more than 10 years. The U.S. Semiconductor Industry Association (SIA) has recently started discussing the “Second Semiconductor Support Act” in semiconductor design. But in Korea, the sense of tension is nowhere to be found. Discussion on the semiconductor tax support bill submitted by the government last month has not begun at the National Assembly, and SK hynix's Yongin Semiconductor Cluster has not even broken ground four years after it was announced.

In the era of economic security, global competition cannot be left only in the hands of the businesses. Full support from the government is needed in all areas, including R&D, investment, and talent acquisition. Although Korean semiconductors have been in crisis lately, it is nothing compared to the time when everything had to begin from scratch. Just as the seeds sown 40 years ago blossomed into a “semiconductor legend,” the government and businesses must work together to achieve the miracle of a “quantum jump” once again.