[News] Semiconductor Foundry Competition Intensifies: Japan and South Korea Step Up

Although the demand in the consumer electronics market has yet to recover, the rise of artificial intelligence and flagship smartphones is driving sustained growth in advanced semiconductor manufacturing. The semiconductor foundry industry remains dynamic, with global research firm TrendForce forecasting a 20% annual growth in foundry output value by 2025, up from 16% in 2024.

The stark contrast in end-market demand has intensified competition in the foundry industry. Taiwan remains the world’s leading hub, contributing over 70% of global foundry output, with TSMC playing a pivotal role. Meanwhile, Japan, South Korea, the United States, and Mainland China are actively developing their foundry industries. Although their current market share is relatively low, policy support and strategic investments by major players are unlocking significant potential.

Recently, Japan and South Korea have made new moves to strengthen their foundry sectors and enhance competitiveness.

Japan’s Semiconductor Revival Plan: Continued Investment in Rapidus

Japan is advancing its semiconductor revival strategy with a new investment in Rapidus. According to Kyodo News, Japan plans to inject 100 billion yen into Rapidus in the latter half of 2025. The combined capital contributions from existing and new shareholders are expected to reach approximately 100 billion yen, matched by government funding. This investment will enable Rapidus to acquire extreme ultraviolet (EUV) lithography equipment essential for producing advanced chips.

Rapidus, founded in August 2022, is a joint venture of eight Japanese companies, including Toyota, Denso, Sony Group, Kioxia, NTT, NEC, SoftBank, and MUFG Bank. Focused on developing and producing advanced process chips of 2nm and below, Rapidus has received initial investments of 7.3 billion yen from its partners and 70 billion yen from the Japanese government. Furthermore, the Japanese government plans to allocate over 10 trillion yen by fiscal year 2030 to support the semiconductor and AI industries, with Rapidus as a key beneficiary.

Regarding its 2nm chip development, Rapidus Chairman Tetsuro Higashi recently announced that the installation of equipment for 2nm chip trial production would be completed by March 2025, with trial production lines starting in April and actual production to follow.

South Korea’s 20 Trillion Won Plan: Aiming for a “Korean TSMC”?

Amid intensifying global semiconductor competition, South Korea is committing 20 trillion won to bolster its domestic semiconductor industry. The plan includes a proposal to establish a Korean Semiconductor Manufacturing Company (KSMC), modeled after Taiwan’s TSMC. Experts estimate that a 20 trillion won investment in KSMC could generate an economic output of 300 trillion won by 2045.

South Korea’s semiconductor industry is facing what industry insiders call its “biggest crisis in history.” Challenges such as weakening leadership in memory chip technology, slow investments, talent outflows, and insufficient policy support have hindered growth.

In the foundry segment, the heavy reliance on Samsung Electronics for sub-10nm processes has constrained smaller semiconductor companies. KSMC is expected to address structural issues by focusing on mature and specialty processes, complementing companies with advanced technologies.

South Korea is also working to strengthen support for small and medium-sized enterprises (SMEs) by directly investing in companies specializing in materials, components, and equipment to enhance the overall ecosystem’s R&D competitiveness.

The government has announced systemic support for the semiconductor industry, including policy financing, infrastructure investments, and tax incentives. By 2025, South Korea plans to provide over 14 trillion won in policy financing for the semiconductor sector, including 4.25 trillion won in low-interest loans through the Korea Development Bank and a new 120 billion won semiconductor ecosystem fund, which will grow to 420 billion won in the future.

Additionally, large semiconductor industry clusters are being developed in Yongin and Pyeongtaek. To support the high energy demands of the sector, the government will cover most of the 1.8 trillion won required for the underground power transmission networks for these clusters and has reached agreements with companies on power supply capacities.

(Photo credit: Rapidus)