However, the advent of the AI era has rapidly transformed the global industrial landscape. The generative AI revolution, sparked by ChatGPT, has led to explosive investments in data centers and AI servers worldwide. AI's need to process vast amounts of data simultaneously has created a demand for ultra-fast, high-capacity memory, specifically high-bandwidth memory (HBM). While the global AI industry currently revolves around Nvidia, South Korean memory technology is integral to its operations. If the U.S. dominates AI platforms and software, South Korea supplies the “memory” essential for the AI era. This situation has led the market to label it a “semiconductor supercycle” not seen in 43 years.
Yet, South Korea must remain cautious at this juncture. Economic booms can cloud judgment. Historically, when a specific industry surges, South Korean society tends to view it as a permanent future. From the rise of heavy industries in the 1970s to shipbuilding and steel in the 1980s, IT and semiconductors in the 1990s, real estate and construction in the 2000s, and more recently, platforms and secondary battery trends, the country has often embraced the fortunes of one industry as the fate of the entire nation. However, industrial history is cyclical. Booms lead to over-investment, which results in oversupply, ultimately causing price crashes and restructuring. This harsh cycle is a recurring theme in capitalist industrial history.
The semiconductor industry is no exception. In the 1980s, Japan dominated the global semiconductor market, instilling fear in the U.S. over its aggressive expansion. Japanese companies nearly monopolized the memory market, leading many to declare it the “Japanese era of semiconductors.” However, following the bubble burst and structural changes, coupled with U.S. technological and trade pressures, Japan's semiconductor industry rapidly declined, paving the way for South Korea's rise. Samsung Electronics emerged as a dominant force in the memory market, and SK Hynix also ascended to global prominence. Yet, this journey was fraught with challenges, as the South Korean semiconductor industry endured numerous downturns, price collapses, and the global financial crisis. This makes the current moment crucial, as booms can be the most perilous times.
Recent debates in South Korea may seem like mere wage disputes, but they reflect deeper issues. Conflicts have arisen over how to distribute record-high operating profits, with labor groups asserting that these results are due to workers' dedication, while markets and minority shareholders argue that profits should primarily benefit shareholders. Meanwhile, lawmakers have raised the point that semiconductors are a strategic national industry. The clash of these three perspectives highlights that semiconductors are no longer just an industry; they have become a key export sector, a matter of national security, a driving force in the stock market, and a cornerstone of youth aspirations and the nation's future. Consequently, semiconductors are increasingly treated as if they embody the “nation itself.”
This is where the danger of “semiconductor disease” begins. The term “Dutch Disease” in economics refers to the phenomenon where a specific industry or resource becomes overly dominant, disrupting the balance of the entire national economy. Originally coined from the Netherlands' experience with a natural gas boom that weakened its manufacturing competitiveness, South Korea now faces a similar risk in a different form. As the semiconductor industry grows too powerful, there is a potential for the national economy, financial markets, and policy decisions to become overly skewed towards semiconductors. In fact, the South Korean stock market has effectively become synonymous with the semiconductor sector. When Samsung Electronics and SK Hynix rise, the entire market follows suit; conversely, when the semiconductor sector falters, the South Korean economy feels the impact. This is not a healthy long-term structure. Over-reliance on a single industry can ultimately destabilize the entire economy when that industry's cycle shifts.
A more pressing issue is the essence of the AI era. Many currently believe that the AI industry will experience perpetual growth. However, the history of technology industries does not support this notion. The dot-com bubble, the LCD industry, and the solar and battery sectors all underwent significant cycles. AI will inevitably face oversupply, price competition, shifts in technological standards, geopolitical risks, and the challenge posed by China. The Chinese factor is particularly significant, as the country is pouring vast resources into AI semiconductors and memory industries. Despite existing technological gaps, China is waging a national effort to establish its own semiconductor ecosystem amid U.S. technological sanctions. Underestimating the speed at which a competitor can catch up is the most dangerous aspect of industrial competition. Japan once chased the U.S., South Korea pursued Japan, and now China is targeting South Korea. Ultimately, the semiconductor industry is a battleground with no permanent victors.
Moreover, the AI era will not conclude with mere memory competition. Future competition is likely to encompass a vast ecosystem involving semiconductors, energy, software, cloud computing, data centers, robotics, AI platforms, defense AI, and quantum computing. At this critical juncture, South Korea faces a pivotal choice. While it currently boasts world-class memory competitiveness, relying solely on memory is insufficient for future security. The true victor in the AI era will likely be the nation that dominates the entire AI ecosystem. The strength of the U.S. is not solely due to Nvidia; it stems from a cohesive ecosystem that includes OpenAI, Microsoft, Google, Amazon, Meta, and Tesla, integrating AI platforms, cloud services, data centers, and software. In contrast, South Korea remains overly focused on a hardware-centric structure.
Thus, South Korea's real challenge is not merely the distribution of operating profits. The crucial question is how to prepare for next-generation AI frameworks, energy efficiency innovations, AI software and data sovereignty, global supply chain restructuring, talent development, industrial diversification, and energy strategies. Particularly in the AI era, energy issues are critical. AI data centers consume enormous amounts of electricity. Ultimately, semiconductor competitiveness is likely to be intertwined with energy competitiveness. This is why major U.S. tech companies are competing to secure nuclear, LNG, and renewable energy sources. The AI era is not just a semiconductor era; it is an “era of energy and data.”
Currently, the world is undergoing three significant transitions simultaneously: the AI revolution, U.S.-China hegemonic competition, and energy and supply chain restructuring. Semiconductors lie at the intersection of these three axes. The U.S. has begun to view semiconductors as a security issue, while China sees them as a matter of national survival. Europe is also investing heavily to revive its domestic semiconductor industry. Consequently, semiconductors have evolved from a mere industry to a strategic asset of modern civilization.
However, this reality necessitates a more sober approach. The moment one becomes complacent in a boom, the risk begins. The saying “居安思危” (think of danger in times of peace) applies here. The South Korean semiconductor industry is undoubtedly positioned at the pinnacle of global competitiveness. Yet paradoxically, this may be the most perilous moment. History has not favored arrogant victors for long. The industries that survive are not those intoxicated by current booms but those that prepare for future crises. The same holds true for South Korea's semiconductor industry.
What is needed now is not mere celebration but a clear strategy. Labor must consider long-term competitiveness, companies should prioritize future ecosystems over short-term results, and the government must focus on the overall structure of national industries rather than political popularity.
Above all, balance is essential. Semiconductors are a core strategic industry for South Korea. However, they must not become a “semiconductor disease” that engulfs the entire nation. The world has already entered an era where the AI revolution, U.S.-China hegemonic competition, energy restructuring, and supply chain wars are unfolding simultaneously. For South Korea to survive amidst these monumental changes, what is needed is not just a jackpot but the ability to design future structures.
Preparing for a downturn without succumbing to the euphoria of a boom, and prioritizing future survival structures over current profits, is the true strategy that the South Korean semiconductor industry and the entire economy must adopt. The AI era is just beginning, and South Korea stands at the center of this monumental historical transition. Ultimately, the nations that survive will be those that prepare for future crises rather than those that revel in current successes.
The same applies to industries. Semiconductors should be a source of pride for South Korea. However, the nation must also prepare for a future that extends beyond semiconductors. This is the true national strategy and the condition for South Korea's survival in the AI era.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.