Although Taiwan’s Silicon Shield dominates global semiconductor manufacturing, South Korea is catching up and becoming equally indispensable. 

The key Korean advantage centers on high-performance memory chips. It is one of only three countries (with Taiwan and the US) able to manufacture these crucial leading‑edge chips, making it a chokepoint.  

AI models such as OpenAI’s ChatGPT have a voracious appetite for cutting-edge memory, which speed up connections with NVIDIA and AMD chips. High-Bandwidth Memory is much faster than standard memory —but also complex to produce. It consumes roughly twice the wafer capacity of standard memory per gigabyte. 

Samsung Electronics and SK Hynix together hold more than half of the global memory market. Alternative American suppliers including Micron and Western Digital cannot easily or quickly replicate Korea’s scale, yields,and technology roadmap. Major memory manufacturers warn that their High-Bandwidth capacity is sold out for 2026.  

The shortages look set to spread. As manufacturers prioritize high-margin High-Bandwidth chips, they are producing fewer “less trendy” memories for smartphones and consumer PCs, sparking “panic buying.” Prices have soared, with some categories of memory chips seeing spikes of more than 300% over the past three months.  

Bringing supply in line with demand will be difficult. It takes a minimum of two years for new manufacturing capacity to come online. Since semiconductors traditionally have been a cyclical industry, Micron and other American chipmakers are expanding production, but remain cautious about overinvesting. 

Not Korea. Samsung alone plans to invest about $310 billion over five years in Korea across semiconductor fabs, AI data‑center infrastructure, batteries, and displays. It’s under-construction Pyeongtaek Plant 5 will run more than 50,000 NVIDIA GPUs for AI workloads and start production in 2028. 

Government support is crucial. In 2023, the country passed an ambitious K-Chips Act, which raised tax credits for semiconductor investment. A record 2024 support package added another  $19 billion.  

The Korean government is backing what it calls the world’s largest “mega chip cluster” outside Seoul, anchored by private investment commitments of around $456 billion to build a vast ecosystem from materials to fabs.This year, the authorities are planning a new $20.4 billion Public Growth Fund that blends government guarantees with private capital to de‑risk chips investment. 

Korea is also trying to move up the value chain — from memory‑centric dominance to a balanced portfolio that includes AI accelerators, automotive chips, and defense semiconductors. Samsung already is the world’s second‑largest contract foundry after Taiwan’s TSMC and is pushing into three nanometer chips. 

Korea is also expanding its role in chip design: Samsung designs advanced Systems on Chip for applications such as smartphones, datacenters, and AI. A proposed public‑private 12‑inch, 40 nm “national foundry” will give semiconductor startups access to local manufacturing. Policymakers have identified defense, telecom, and data center semiconductors as a vulnerability – currently 99% import-dependent.  

Despite this prowess, Korean chipmaking faces serious challenges. Start with water and power constraints. The planned Yongin chip cluster is expected to need around 13–15 gigawatts of electricity — roughly equivalent to 10 to 15 nuclear reactors. Senior politicians have warned that, in drought conditions, diverting huge volumes of industrial water to Yongin could threaten drinking water security for the Seoul metropolitan area.   

Another challenge concerns skills. Korea’s Ministry of Trade, Industry and Energy forecast a shortage of about 56,000 semiconductor engineers by 2031. 

The government is moving fast to address these weaknesses. A draft Special Semiconductor Act will, for the first time, give legal backing to direct state subsidies and infrastructure spending for chip projects, moving beyond tax credits.​ The bill creates a Presidential Committee for Semiconductor Industry Competitiveness, mandated to draw up rolling fiveyear strategies and annual implementation plans and to coordinate ministries on land, power, water, and regulation. 

Korea’s position as a US‑aligned democracy with deep integration into American and European tech ecosystems makes it a trusted ally in both design and manufacturing. US cloud providers, chip designers, and defense contractors rely on Korean chips. Korea diversifies supply, reducing dependence on Taiwan. The US cannot go at it alone in semiconductors. It needs Korea. 

Christopher Cytera CEng MIET is a senior fellow with the Tech Policy Program at the Center for European Policy Analysis and a technology business executive with over 30 years’ experience in semiconductors, electronics, communications, video, and imaging. 

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.

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