December 26, 2024 /SemiMedia/ — South Korea is considering establishing a government-funded chip foundry, tentatively named Korea Semiconductor Manufacturing Company (KSMC), as part of its efforts to strengthen competitiveness in logic chip manufacturing and foundry services.

At a seminar hosted by the National Academy of Engineering of Korea (NAEK), Ahn Ki-hyun, president of the Korea Semiconductor Industry Association, advocated for long-term investment. He projected that a 20 trillion won ($13.9 billion) investment in KSMC by 2045 could generate an economic impact of 300 trillion won ($208.7 billion). However, experts questioned whether such funding would be sufficient to build a high-end chip foundry.

The initiative faces hurdles, including limited advanced manufacturing capabilities, a lack of customer demand, and an underdeveloped fabless ecosystem. While South Korea dominates the global memory market, it lags behind in logic chip technology and design, especially in mature and specialized nodes.

The country’s semiconductor industry heavily depends on Samsung's advanced sub-10nm nodes, leaving little room for manufacturing diversity. In contrast, Taiwan has created a more balanced ecosystem with companies like UMC and Powerchip focusing on mature nodes that complement TSMC’s cutting-edge technologies.

To address these structural issues, the KSMC proposal aims to provide resources to smaller companies, helping them grow alongside industry giants like Samsung and SK Hynix. Participants at the seminar underscored the urgency of closing technology gaps, attracting investment, cultivating talent, and reforming regulations to safeguard South Korea's leadership in the semiconductor sector.

The proposed KSMC could play a pivotal role in strengthening South Korea’s semiconductor supply chain and improving its standing in the global market.