Korean Semiconductor Companies Courted by the EU

European Commissioner for the Internal Market Thierry Breton is visiting Korea on Sept. 30 and Oct. 1 for talks with officials from Samsung Electronics and SK Hynix. At these meetings, he is likely to put forward incentives to attract investment from the Korean companies.

Taiwan's TSMC and Korea’s Samsung Electronics are the only foundry companies in the world that have cutting-edge process technology. And Samsung Electronics and SK Hynix have an overwhelming share of the global memory semiconductor market. For the EU, which is seeking to expand its semiconductor production facilities, it is essential to attract investment from these Korean companies.

Realizing the importance of strengthening the semiconductor industry, the EU launched a major campaign last year to promote the semiconductor industry quickly. It aims to expand its share of global semiconductor production from the current 10 percent to 20 percent by 2030. It has decided to strengthen the competitiveness of its semiconductor industry by investing 145 billion euros over the next two to three years. On top of that, it chose semiconductors as one of the six strategic industries to be promoted under a new industrial policy. Moreover, it will form semiconductor alliances among companies in the EU and strengthen international cooperation in the semiconductor sector.

These efforts came amid Washington’s pressure on Korean companies to present sensitive information to enhance transparency in the global semiconductor market and solve the ongoing semiconductor shortages.

It remains to be seen whether Korean companies will actually build factories in Europe. Samsung Electronics and SK Hynix have already announced large-scale investment plans in Korea and the United States. In addition, industry experts say that it is not easy for Korean chipmakers to make huge investments in Europe because Europe’s demand for semiconductors produced by Korean companies is relatively small compared to other regions.

Intel announced earlier this month that it would invest up to 80 billion euros in Europe to build two semiconductor plants. The U.S. chip giant did not officially reveal that it will receive subsidies from the EU, but many analysts say that the EU may have promised such subsidies to Intel. Before the investment announcement, Intel CEO Pat Gelsinger said that the EU would need to offer eight billion euros in subsidies to attract an Intel plant. Intel made the final decision to invest in Europe after active discussions with EU governments.

The United States is also seeking cooperation with the EU. The United States and the EU held their first Trade and Technology Council meeting in Pittsburgh on Sept. 29 (local time) to strengthen cooperation in semiconductor supply chains and secure leadership in the era of technological competition. The two sides agreed to strengthen mutual communication to identify common vulnerabilities related to semiconductor supply chains and develop regional technology R&D and manufacturing ecosystems. They also agreed to actively support the expansion of their countries’ semiconductor production capabilities.

According to the U.S. Semiconductor Industry Association (SIA), the United States accounted for 47 percent of the world semiconductor market in 2020, while Europe had 10 percent. The combined market share of the United States and Europe eclipses Korea's 20 percent, Japan's 10 percent, Taiwan's 7 percent, and China's 5 percent. But their combined production capacities, excluding fables companies, stand at 21 percent.

Industry watchers say that while the United States, China, and Europe are scrambling to seize global semiconductor hegemony, Korea is facing both opportunities and crises. They advise the Korean semiconductor industry to develop competitiveness while properly responding to the current complex situation.