Focusing only on manufacturing without the innovation and creativity required for design capabilities
Automotive semiconductors struggle to develop sustainably without national support

Sharp criticism has been raised by experts, stating that while Son Heung-min has risen to become a world-class player by utilizing both feet with ease, Korea's semiconductor industry is currently in a wasteland-like situation, lacking a "leg" in the form of system semiconductors.

Representative Kang Hoon-sik, together with Chungcheongnam-do and the Korea Automotive Research Institute, held the '2023 Chungnam Future Automobile Innovation Ecosystem Establishment' at the National Assembly Members' Office Building on the 26th and provided a venue for discussion on the establishment of a public foundry for automotive convergence semiconductors.

This forum was organized by Chungcheongnam-do and Asan City, which are preparing to apply for government grant projects such as the establishment of a public foundry for automotive semiconductors and the comprehensive mobility infrastructure construction project for the realization of advanced autonomous driving, to discuss response measures to the paradigm shift in the global market.

In his opening remarks, Representative Kang Hoon-sik stated, “Domestic automotive semiconductors rely on imports for 97% of their supply, resulting in a very weak self-sufficiency rate,” adding, “It is an urgent time for multifaceted policy support to ensure that domestic automotive companies do not lose their competitiveness in the global market.”

Lee Jo-won, Chairman of the 3D Printing Research Association (and former Director of the National Nanotechnology Center), delivered a presentation on the 'Plan to Establish a Public Foundry for Automotive Convergence Semiconductors,' discussing a sector accounting for 60% of the global semiconductor marketHe expressed regret that Korea's influence in the STEM semiconductor sector is lacking.

Lee Jo-won, Chairman of the 3D Printing Research Association

Professor Kim Ki-hyun, who chaired the discussion, stated, “In order to become a global semiconductor powerhouse, we must foster the system semiconductor business,” adding, “The government recognizes this importance and is pursuing policies, but the localization rate for automotive semiconductors is very poor, standing at only 3%.”

He continued, “The industry’s perspective is multi-product, small-batch production, so it does not feel the need to take on a new challenge,” adding, “I hope that Chungcheongnam-do takes the lead in opening the way through public procurement and comes up with a vision to ensure a soft landing.”

"In particular, in the system semiconductor field, there are absolute powerhouses such as Intel for computers, Qualcomm for smartphones, and Infineon for automobiles, as well as many masters of the field, making it difficult for small and medium-sized enterprises to enter. Furthermore, regarding automobiles, there are issues with functional safety, so demand companies are reluctant to switch to other semiconductors," he pointed out.

Kim Sun-woo, a team leader at Meritz Securities who participated in the discussion, argued, “Korea is merely a nation specializing in memory semiconductors, accounting for only 25% of the 600 to 700 trillion won semiconductor market. It has transformed into a specialized nation that focuses its efforts on manufacturing without the innovation or creativity required for design capabilities,” adding, “If Son Heung-min is ambidextrous, semiconductors are at a level where they lack one foot.”

Team Leader Kim said, “Automotive semiconductors with the characteristics of multi-product, small-batch production“Even the U.S. companies that used to produce them are no longer to be found,” he said, emphasizing that “from Korea’s perspective, which lags behind in design capabilities, automotive semiconductors cannot emerge organically without national support.”

He stated that it is necessary to attract special organizations so that companies such as Qualcomm, NXP, and Infineon can collaborate with Korean automakers on development, and that measures to prevent the outflow of talent must also be prepared given Chungnam's geographical characteristics.

Kim Seo-kyun, Secretary General of the Korea Fabless Industry Association, stated, “There is no system semiconductor market in our country, and it is at the level of a wasteland,” adding, “Korea’s share of the global system semiconductor market is only 3.3%, and excluding Samsung Electronics, it is only 1%.”

He added, “We cannot expect growth in the fabless industry with the system semiconductor fostering policies implemented so far alone,” stating, “It is necessary to establish a system semiconductor fostering complex centered on public foundries and to prepare mid-to-long-term support measures by securing specialized clusters that can be intensively fostered.”

He also raised his voice, stating that Korea's public foundry infrastructure is merely on life support and that if the establishment of a public foundry is to be pursued in Chungnam, preparations must be made to provide steady support for at least 10 or 20 years.

Secretary General Kim stated, “There are fewer than 150 fabless companies in our country, and fewer than 10 companies design semiconductors for automobiles.” “We must develop fabless companies alongside the establishment of foundries,” he said. “Chungnam’s plan to build an automotive semiconductor foundry is timely, and this could be the last opportunity for our country to shine in the system semiconductor industry.”

Choi Bo-seon, Head of the Automotive Division at the Ministry of Trade, Industry and Energy, stated, “The Ministry recognizes the importance of automotive semiconductors and shares the same vision as the participants in this forum,” adding, “While there are many concerns regarding national R&D, the budget for automotive electrification and autonomous driving has actually increased.”

He said that although the semiconductor supply shortage has stabilized and production disruptions have been significantly reduced, he is aware that there are many concerns about whether the fundamental situation has changed, so he will make efforts to prepare step by step before the tide goes out again.

Manager Choi stated, “In the short term, we are conducting demand-tailored projects worth 70 billion won, and knowing full well that this is insufficient, we are preparing for a preliminary feasibility study.” He added, “We are working hard to prepare a project worth 800 billion won across 16 fields in four major areas of semiconductors: process, sensor, power, and mixed signal. If we apply for the preliminary feasibility study in late 2023 or early 2024, we will ensure that we can expand the scale over the long term.”