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SEMICONDUCTORS Chip production: Could South Korea become the new Taiwan?

From Simon Morrison Reading Time: 6 min

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The race for total dominance of the global semiconductor market has begun in earnest. South Korea’s Samsung has ramped up its rhetoric to assert that it could overtake Taiwan's TSMC within five years. Is Samsung’s bold claim possible, or is the company just posturing? We look at whether the semiconductor industry is going to be in for such a seismic shift in the near future.

South Korea's Samsung plans to catch up to and surpass the production capabilities of Taiwan's TSMC within the next five years.
South Korea's Samsung plans to catch up to and surpass the production capabilities of Taiwan's TSMC within the next five years.
(Source: Flag Store -

Things are getting decidedly more interesting in the global semiconductor industry. The so-called Chip Wars have begun to significantly heat up in recent weeks. South Korea's leading electronics company Samsung has stated that it seeks to topple the long-established dominance of Taiwanese semiconductor behemoth Taiwan Semiconductor Manufacturing Limited (TSMC).

According to statements made by Dr Kye Hyun Kyung, the President and CEO of Samsung Electronics Device Solutions, Samsung plans to catch up to and surpass the production capabilities of TSMC within the next five years. In a speech to the Korea Advanced Institute of Science & Technology (KAIST) in early May, Dr Kyung admitted that while Samsung is currently far behind TSMC in terms of technology, but also stated that "We can outperform TSMC within five years." Such a bold claim would be remarkable at any time, but Dr Kyung’s assertions seem particularly extraordinary given the current global economic inflationary conditions. Is it realistic to think that Samsung could overtake Taiwan's TSMC and become the world’s largest producer of semiconductors?

How did South Korea become a leader in the semiconductor industry?

The Samsung Group is currently the biggest company in South Korea with an estimated market cap of US$361.75 Billion and a net worth of approximately US$262.80 billion. It is also the largest family-owned conglomerate in South Korea. These types of conglomerates are known as chaebols and are intrinsic to the economy of South Korea.

The Samsung Group comprises 60 companies and is the biggest chaebol in the country. Samsung accounts for an estimated 18.3 % of the South Korean economy. It is the world’s 21st most valuable company. South Korea's Finance Minister Choo Kyung-ho recently described the semiconductors made by Samsung as ‘…the rice of industry’ and said, ‘If there are no semiconductors, neither our economy nor our industry can run.’ His statements were echoed by the Ministry of Economy and Finance.

For such a giant conglomerate, Samsung had modest beginnings. The company was founded in 1938 as a trading company. During the 1960s Samsung made its way into the electronics industry. In 1974, the company purchased Hankook Semiconductor and began to invest seriously in chip research and manufacturing. By 1983 Samsung had developed a 64Kb DRAM chip and by 1988 had developed a 4Mb DRAM chip. By 1992 Samsung had created the world’s first 64Mb DRAM and was leading the world in DRAM market share. Samsung is still a major player and is the largest memory chip manufacturer in the world.

When it comes to non-memory semiconductor chips, however, Samsung lags behind TSMC which has been the world leader in semiconductors for more than 35 years. Samsung has set its sights on removing TSMC from the top position by investing US$230 billion into semiconductor manufacturing over the next two decades. Samsung and the South Korean government are developing a new semiconductor complex that is planned to be the biggest in the world.

Through a spokesperson, South Korean President Yoon Suk-yeol was recently quoted as saying ‘While it’s important for a high-tech industry such as semiconductors to grow through a mid-to-longer term plan, we must swiftly push ahead with these plans as if it’s a matter of life and death, given the current situation of global competition.’

Samsung vs. TSMC



Samsung Electronics

Foundry Market Share



Net Worth to Date

US$535.25 billion

US$262.80 billion

5 Year CAGR   



No. of Employees


266,673 employees

Av. Revenue Last Quarter

Down 1%

Down 3.5%

Can South Korea become the next semiconductor superpower?

Is it possible for Samsung to achieve its lofty aims and become the world’s leading semiconductor superpower? At the time of writing, Samsung is still far behind TSMC when it comes to foundry technology, a fact acknowledged by Dr Kyung himself. With the money that Samsung has already spent on modernizing its processes, it has already made significant strides in catching up to TSMC. Samsung expects that the massive injection of capital into production capacity will help to further close the gap between the two rivals.

As well as ramping up investment, Samsung is also betting on the development of new technologies to give it the edge over TSMC. Samsung is the first foundry to use gate-all-around (GAA) transistor technologies to make the latest 3-nanometer semiconductors. The GAA technique is in contrast to TSMC’S FinFET process. Samsung states that they believe while they are currently two years behind TSMC in developing 4-nanometer semiconductors, they are only one year behind the Taiwanese company when it comes to 3-nanometer semiconductors.

GAA will prove critical in the race to dominate the semiconductor industry as TSMC is planning to use GAA for its 2-nanometer processes. When this happens, Samsung expects to have a significant advantage, since it will have already been using the GAA process to produce 3-nanometer semiconductors. This experience is what Samsung thinks will make all the difference in the struggle to develop faster and more powerful semiconductors.

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Additionally, Samsung expects that its memory processors will become the preferred option for tech firms in the race to develop artificial intelligence applications. Samsung is betting that its technology will prove to be superior to NVIDIA's graphics processing units (GPUs), which are the current industry standard and are manufactured by TSMC.

All of this is well and good, but it is dependent on a variety of factors. Firstly, Samsung is expecting that it will beat TSMC in the race to produce 3-nanometer semiconductors. But not all 3-nanometer semiconductors are the same. Some analysts say that the current 3-nanometer chips from Samsung only equate to the 5-nanometer chips from TSMC. Samsung is also expecting TSMC to have serious issues in transitioning to GAA technology for its production of 2-nanometer semiconductors. Also, Samsung will need to unveil a 2-nanometer chip that is at least double the power of what TSMC can produce. None of these predictions, however, are guaranteed.

TSMC has an overall capacity that is 2.7 times larger than Samsung. The Taiwanese company also produces 6.6 times the revenue of Samsung. In terms of capital expenditure, TSMC is planning to maintain its current course, which is equal to the combined spending of both Intel and Samsung. TSMC is also expected to benefit significantly from the Biden government’s Chips and Science Act which has allocated US$52 billion towards investing in companies that are seeking to establish chip production in the US. Samsung, on the other hand, has been losing its customers to TSMC. Most notably, NVIDIA and Qualcomm recently opted to make the move from Samsung to TSMC.

When looked at carefully, it does seem as though Samsung’s bold claims simply don’t add up. But it is possible that the South Korean company may pull ahead dramatically with the release of its 2-nanometer chip. If AI developers go with Samsung GPUs, then TSMC could very well be left behind. To gain access to funds from its CHIPS Act, the US is prohibiting companies from opening new chip plants in China. This could also damage TSMC’s ability to stay competitive.

Samsung has given itself a five-year window to overtake the towering figure of TSMC. While many analysts simply believe this to be posturing, nobody can say what the future holds. Five years ago, very few people (if any) foresaw the coming of the Covid-19 coronavirus pandemic or could have guessed at its massive impact on the world economy. Will Samsung reign as the supreme semiconductor company in five years? It does seem unlikely, but only time will tell the tale.

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