Introduction: Represented by Samsung and SK Hynix, South Korea’s semiconductor industry is the absolute leader in the global memory chip sector, dominating the DRAM and NAND Flash markets. With its IDM model, cutting-edge manufacturing processes, and continuous technological iterations, it has built extremely high industry barriers, becoming an indispensable core pillar in the global technology supply chain, with a significant position. What has contributed to all of this?
Let’s take a step back to the 1980s, when the Japanese semiconductor industry was in its golden age, holding an absolute leading position. With the Japanese industry-academia-research model, it established the “Very Large Scale Integration” (VLSI) national project, which brought about technological breakthroughs. Japan’s lean manufacturing capabilities and quality control were already top-notch. Companies like Toshiba (which has since spun off its storage division and renamed it Kioxia), NEC, and Hitachi dominated the global DRAM (Dynamic Random Access Memory) market, holding an 80% share. This forced American Intel to exit the DRAM market and shift its focus to CPUs. From the American perspective, the rise of the Japanese semiconductor industry posed a serious challenge and threat to U.S. economic security and technological hegemony. Unable to compete with Japan through technological and economic means, the U.S. resorted to political tactics, even using military occupation to force Japan to sign the U.S.-Japan Semiconductor Agreement (in 1986 and 1991). This agreement mandated Japan to open its domestic market, ensuring that U.S. chips would achieve a market share of 20% in Japan and accept price monitoring. This directly limited the pricing power and profits of Japanese companies. Additionally, the U.S. government imposed anti-dumping duties of up to 100% on Japanese DRAM chips to specifically target Japan’s export competitiveness. The U.S. also supported its semiconductor industry by establishing SEMATECH (Semiconductor Manufacturing Technology Alliance), collaborating with the government and domestic companies to develop advanced process technologies to counter Japan. This series of actions by the U.S. greatly squeezed the profit margins and development freedom of the Japanese semiconductor industry, forcing Japan to shift from expansion to defense, creating space for its European and American competitors. At the same time, it opened a once-in-a-lifetime strategic window for another potential competitor of Japan’s semiconductor industry—South Korea.
As early as the early 1980s, South Korea had already passed the Semiconductor Industry Support Plan and the Very Large Scale Integration Technology Joint Development Plan, viewing the semiconductor industry as a national strategic industry. Amid the fierce disputes between Japan and the U.S. over semiconductors, the South Korean government collaborated with conglomerates to make counter-cyclical investments as the friction between Japan and the U.S. led to a sharp decline in DRAM prices and a market slump. Particularly, the Asian financial crisis that erupted in 1998 forced many Japanese semiconductor giants (such as Hitachi and NEC’s DRAM divisions) to merge and restructure (ultimately forming Elpida), or gradually exit the market. In contrast, Samsung, backed by American capital, weathered the financial crisis and made counter-cyclical investments and acquisitions. Especially, taking advantage of the Japan-U.S. semiconductor friction, many semiconductor talents faced career limitations, allowing South Korea to recruit and poach talent. The semiconductor industry is capital-intensive and gathers high-end talent, and with both conditions met, it was only natural for South Korea to surpass Japan.
In 1992, South Korea began to fight back. Samsung was the first to launch the world’s first 64Mb DRAM, technically surpassing Japan for the first time. Since then, South Korea has continued to lead in technology and mass production pace, completely shedding the role of a follower. By the late 1990s and early 21st century, Samsung Electronics had become the largest DRAM manufacturer in the world, while another South Korean giant, SK Hynix (then known as Hyundai Electronics), also ranked among the world’s top players. Japan’s dominant position in the storage market was completely replaced by South Korea, reshaping the global semiconductor industry landscape.
