Chip Wars: South Korea Suffers and Plans to Clone Taiwan's Success

The tech war between the United States and China is not a two-player game. It is causing severe "collateral damage" to key allies like South Korea, whose vital semiconductor industry is caught in the crossfire, forcing it to consider a bold plan to secure its future.

The global battle for supremacy in semiconductors, commonly known as the "chip wars," is redefining the global technological order. But beyond the direct confrontation between Washington and Beijing, its shockwaves are hitting other crucial players hard. South Korea, a tech giant in its own right, finds itself in an increasingly precarious position, forced to navigate a geopolitical minefield that threatens the heart of its economy.

South Korea's dilemma is acute. Historically, China has been a massive market for its technology exports, accounting for up to two-fifths of the total by the end of 2024. Giants like Samsung and SK Hynix, global leaders in memory chips, rely heavily on their operations and sales in the Asian giant.

However, the sanctions and restrictions imposed by the United States to curb China's technological advancement have placed Seoul at a crossroads. The South Korean government has found itself in the awkward position of having to "stand up" to its main security ally, the United States, to protect its companies' commercial interests in China.

The industry's internal situation has been described as "hell." Local experts point to a weakening of the local supply chain and a worrying lack of progress in critical areas such as semiconductor design and packaging, which could lead to "industry collapse" if not addressed.

Faced with this existential crisis, a radical and ambitious solution has emerged: copy Taiwan's successful model. The proposal is to create a state-backed semiconductor foundry, tentatively called Korea Semiconductor Manufacturing Company (KSMC), designed to emulate the dominance of Taiwan Semiconductor Manufacturing Company (TSMC).

* An initial investment of 20 trillion won (approximately US$13.9 billion).

* A projected economic impact of $208.7 billion over the next 20 years.

This move is much more than simply building more factories. It represents a fundamental shift in South Korea's industrial policy. The country's current model is dominated by integrated conglomerates like Samsung, which design and manufacture their own products (such as Galaxy phones) and, at the same time, manufacture chips for others, including their competitors. TSMC's success in Taiwan, by contrast, lies in its "pure-play foundry" model: it manufactures chips for clients like Apple and Nvidia, but does not compete with them in the final product market. By attempting to create a neutral, state-backed TSMC, South Korea seeks to attract those fabless design firms that today rely almost exclusively on TSMC, thereby breaking Taiwan's de facto monopoly on manufacturing the most advanced chips.

The KSMC plan is a manifestation of a broader global trend toward technological sovereignty. The trade war is forcing nations to avoid relying on others for critical technologies. The urgency is magnified by China's constant military threat to Taiwan. In a testament to the gravity of the situation, it has been revealed that Taiwanese authorities are prepared to sabotage their own semiconductor facilities in the event of an invasion, to prevent them from falling into Chinese hands. This reality underscores why countries like South Korea feel a pressing need to develop viable alternatives.

Meanwhile, China continues its own march toward self-sufficiency, developing new artificial intelligence models like Deepseek, designed to be less dependent on Western technology and hardware.

In conclusion, South Korea's ambitious plan is more than just a commercial venture; it's a major geopolitical maneuver. It's a clear sign that the global technology landscape is fracturing, and in the heat of the US-China chip war, new national champions and new strategic alliances are being forged.