▲ President Lee Jae-myung speaks at the National Report Meeting on the 3 Major Mega Projects held at the Blue House on the 29th.
In Taiwan, home to the headquarters of TSMC, the world's largest foundry (semiconductor contract manufacturing) company, voices of caution are emerging regarding South Korea's large-scale semiconductor and artificial intelligence (AI) investment plans.
According to Taiwanese media outlets including the United Daily News and China Times on the 30th, Liu Pei-chen, a researcher at the Taiwan Institute of Economic Research (TIER), analyzed that South Korea's announcement of its '3 Major Mega Projects' (semiconductors, AI data centers, and physical AI) will intensify direct competition between Taiwan and South Korea.
Liu predicted that South Korea's massive investment would serve as a practical motivation for Taiwan to further accelerate its research and development (R&D) for advanced process technology.
Nevertheless, she emphasized that Taiwan would maintain its irreplaceable value as a global semiconductor hub.
Lin Wei-chih, executive vice president of the ZP Industrial Trend Research Institute, who previously served as a strategy vice president at Taiwan's Foxconn (Hon Hai Precision Industry), argued that South Korea's plan is focused on absorbing the spillover effects of the global AI market and is an imitation of the science parks that are key to the success of Taiwan's semiconductor industry.
He pointed out that if global demand slows down in the future, South Korea will face challenges due to a lack of domestic demand and high depreciation costs, whereas Taiwan will maintain solid core competitiveness because it has reached a mature stage.
The argument is that if one assumes AI demand slows down around 2032, the South Korean government-led project, which takes about 5 to 6 years, may not finish the depreciation of factory construction equipment, potentially making South Korea's risk higher than Taiwan's.
He also mentioned that fostering a semiconductor cluster requires a long time, noting that China has failed to surpass Taiwan despite 10 years of investment, and that South Korea lacks a vast domestic market like China.
Taiwanese experts interpreted that because the semiconductor industry is inherently capital-intensive, the primary purpose of South Korea's investment in the Honam region is to alleviate pressure from rising land, water, electricity, and cost constraints in the capital region.
However, they pointed out that massive investments entail astronomical fixed depreciation costs.
Experts warned that considering the South Korean economy is composed mainly of giant technology conglomerates, if demand slows or utilization rates fall, depreciation costs could erode corporate profits, potentially trapping these companies in a 'capital expenditure trap.'
Previously, the South Korean government and companies such as Samsung Electronics and SK Hynix announced a semiconductor investment plan worth approximately 1,500 trillion won, including an 800 trillion won semiconductor production base in the Honam region, on the 29th.
When all long-term investment plans additionally disclosed by the companies are combined, the total reaches the 4,700 trillion won range.
(Photo: Blue House Press Corps, Yonhap News)
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