Sitting on the same set of prescriptions
I toured industrial sites in China with a team of Korean reporters in early 2000s when Beijing turned aggressive in opening and inviting foreign investment. Although press investigation and coverage was still under state watch and regulation, we were able to visit major industrial cities across China and meet policymakers without much constraint. They were more than willing to meet Korean reporters covering semiconductor industry. They spoke passionately of their interest and aspiration in chip-making.
Beijing formerly announced a state agenda to foster and build the semiconductor industry five years ago. But their chip-making ambitions go back farther. It is now close to achieving its dream. Last week, a state-owned Chinese entity announced it will be building a giant memory chip plant. Unlike system-on-chip market, entry into the memory chip segment is extremely tough. China persistently bid merger and acquisition deal, but received a setback every time. Despite its generous offer, it was unsuccessful in its repeated attempt to buy U.S. chipmaker Micron Technology.
China tried indirect means to acquire another U.S. memory company, fielding a U.S. hard-disk drive maker to purchase SanDisk, a producer of flash memory storage with funds from state entity Tsinghua Unigroup Holdings. But experts doubt Washington would authorize its NAND flash memory chip-making technology falling in the hands of the Chinese. Although the doors to the memory industry remain tight, China boldly decided to pour in $15 billion into building its own chip-making foundry.
People in the semiconductor industry are not surprised. They expected the rich Chinese capital will eventually bulge into the sector, having seen the colossal money and resources Beijing poured into the field of research and manpower. The International Electron Devices Meeting that reports on technological breakthroughs in the field of semiconductor carried 26 publications from Chinese nationals last year, doubling 13 from Korea. If it cannot bring a company, China can still draw the engineers and designers in the field, the same way Korea turned itself into chip-making powerhouse. We too knew the Chinese would one day catch up.
Our global leaders Samsung Electronics and Hynix are determined to stay way ahead through persistent investment and new technologies. They don’t believe the Chinese will become a threatening competitor within the next five to 10 years. But when it involves China, the problem is not the technology. Half of the global memory chip demand comes from China. If China insists on using cheap local produces to nurture its industry, Korean chipmakers will inevitably lose much of its market.
Where would our industry be in 10 years time? The industry has been sitting on the same set of prescriptions for the last one or two decades. It needs to further develop and broaden system-on-chip and the parts and materials sector. But there has been little progress. Having indulged in the top rank dominating 70 percent of the global memory chip market, the industry has neglected in tending to the habitat for sustainable, inclusive, and extensive growth.
The pipeline in human resources and research has been drying up fast. Fewer wish to study or stay in the field. The Inter-University Semiconductor Research Center has been unable to find a replacement for its director. Next year’s government budget has no spending earmarked for R&D in semiconductor field. The integrate SOC is bred on idea and technology rather than capital. Many fabless designers ventured into the field 10 years ago, but we see few new entries these days. Large companies build even the smallest parts themselves and import them from China or Taiwan. Local designers have no room to grow.
The shadows under massive trees that suck up the soil’s riches and sunlight are dark and cold. The land of the world’s largest chip-making forest is turning barren. When the storms arrive, a few large trees are on their own to defend themselves. Whether they are too big to fall or not would be their own fate now, having long neglected to share the fruits of their heyday with the supply chain.
JoongAng Ilob, Nov. 11, Page 34
The author is an editorial writer of the JoongAng Ilbo.
by Yang Sunny