The South Korean government has begun developing a mid- to long-term semiconductor industry strategy to respond to memory cycles that are difficult to predict. While the Korean economy continues to grow strongly amid a memory boom that has exceeded market forecasts this year, the move stems from concerns that a "chip winter" arriving in two to three years could deal a greater shock to the broader economy. The government's plan is to strengthen the resilience of the entire supply chain by also fostering the competitiveness of the non-memory semiconductor industry, which is less affected by market conditions.
According to industry sources Monday, the Korea Institute for Advancement of Technology (KIAT) recently launched research into diagnosing the domestic semiconductor industry and securing mid- to long-term competitiveness, at the request of the Ministry of Trade, Industry and Energy. The government plans to release detailed implementation measures for the semiconductor industry strategy announced last year, based on KIAT's research findings.
Within the government, there is no disagreement that the memory super cycle will continue for at least one to two more years. With demand for artificial intelligence (AI) surging while computing power remains far short, big tech companies such as Nvidia have repeatedly cited supply shortages. Expensive AI equipment and data centers are also assigned long depreciation periods in accounting terms, giving big tech firms greater capacity to invest.
Despite such optimism, the government and business community share the view that they cannot let their guard down. A senior government official explained, "Just as no one foresaw the memory super boom two years ago, it is true that no one can easily predict what the market will look like two years from now."
Accordingly, the government plans to diversify its key industries and export items, such as batteries, defense, and robotics, while also seeking ways to ease the concentration on memory chips within the semiconductor industry. The aim is to simultaneously secure competitiveness in system semiconductors, including foundry (contract chip manufacturing), design, and advanced packaging, which are relatively less sensitive to price changes driven by economic and technological shifts. A KIAT official said, "While the current semiconductor super cycle led by AI differs from those of the past, there is a need to respond in advance to the crisis ahead."
