[Editorial] The birth of a ‘unicorn’ in the fabless world

Korea has produced its first unicorn valued at over 1 trillion won ($759,300,000) in the fabless chip design, an area dominated by U.S. names. FADU Technology was founded in 2015 by engineers at the Systems Software & Architecture Laboratory at Seoul National University. In the latest series of pre-IPO fund-raising, FADU drew 12 billion won with an estimated enterprise value of 1.08 trillion won.

The rise of the company raises hopes on the horizon of system chip design, an area Korea has been lagging in. System chips have been rising exponentially to command 70 percent of the global chip market. But the area has been out of touch for Korea whose chipmaking has evolved primarily around memory chips. In fabless chip design, Korea accounts for just 1 percent range, far behind Taiwan as well as China. FADU, however, has been making strides as the sole Korean player.

In just a year after the founding of FADU, its flash controller architecture for solid-state drive (SSD) drew recognition from SSD leader Intel. It has since drawn big-tech clients like Meta and turned into a profit last year. Even under the slack investment period for start-ups, it attracted investment 20 percent beyond its target.

The feat by FADU offers lessons not just for the Korean chip industry but also for brain power pooling. The company was founded by five scientists from the same lab and five other crucial engineers to commercialize their research work. It was joined by engineers who had worked for more than 10 years in Samsung Electronics and SK hynix to back its on-field know-how. The connection in the chip ecosystem has been behind FADU’s success.

To defend chip sovereignty amid intensifying competition, securing brain power is the most important of all. The Yoon Suk Yeol government proposes to foster top chip engineers. The Ministry of Education announced an outline to promote chip studies, offering 54 billion won alone this year to universities eager to nurture chip talents in hopes to generate at least 400 chip talents each year.

The government is moving in the right direction to promote the benign cycle in the chip talent pool. But its plan may not work out, given the bias on science and math talents over medical fields. The 10 early admits to the system chip engineering department of Yonsei University for the 2023 school year with a guarantee to landing jobs at Samsung Electronics all gave up enrollment. Instead of stretching the quota for the department, authorities must come up with more practical incentives for science and engineering majors to lure talents into the field.