South Korea takes lead in semiconductor industry investment over China

South Korea plans to surpass China in the semiconductor industry by increasing investment in chip manufacturing by 2024.

South Korea aims to overtake China in terms of investment in advanced chip-making equipment by 2024. This important step shows the impact of US export controls on the global semiconductor supply chain. Data from the Semiconductor Industry Association (SEMI) based in the United States show that South Korea’s investment in chip-making equipment is likely to reach $21 billion, a 41.5% increase, while China’s figure will increase by 2% to $16.6 billion.

According to Gizmochina, South Korea’s increased investment in chip manufacturing highlights China’s continuous efforts to improve its chip-making industry by providing essential equipment. US-imposed restrictions on China have made it much more difficult for them to access top chip-making equipment manufacturers, including ASML of the Netherlands. With the joining of the Dutch and Japanese governments with the United States in imposing export restrictions on chips and advanced equipment, the path of activity in this industry has become much harder in China.

Suppliers of chip-making equipment in the United States, including Lam Research Corp, Applied Materials Inc, and KLA Corp, are expected to lose a significant portion of their income due to government restrictions against China. The semiconductor industry is very important in the economic and political competition because demand for advanced chips needed for artificial intelligence, self-driving vehicles, and other high-level technologies is increasing. For example, ChatGPT uses tens of thousands of Nvidia A100 chips, a product that is banned from being sold to China.

South Korea, with its understanding of the high importance of the chip industry and increasing concerns of the United States, is now focusing on establishing chip manufacturing factories in its own country. The President of South Korea, ‘Yoon Suk-yeol,’ announced earlier this month that he will soon begin investing in chip production chain in southern Seoul, and Samsung has also pledged to invest $230 billion in this area over the next two decades. The Korean technology giant is also building a new semiconductor factory in Texas to expand its chip business, especially in the US market.