Don’t ignore the chip-packaging field

The National Assembly must hurry in approving the bills related to chip promotion, AI and electricity infrastructure to vitalize the chip habitat.

Korea is unrivalled in memory chip production. Samsung Electronics and SK hynix dominate the market as the world’s two largest companies in the field. The computing memory role has enlarged with the rise of generative artificial intelligence enabling litanies of services after big-data learning as the function relies on immense data storing and processing through GPUs. But Korea lags in the key packaging process designed to enable multi-tasking AI chips and computing. Packaging is essential to house logic, memory, sensors and other functional transistors in a single component. The downstream process in chipmaking has emerged as the core of the AI-led chip revolution. The Boston Consulting Group in a recent report projected “a radical shift in the semiconductor industry landscape” through advanced packaging. Its advanced packaging techniques have elevated Taiwan’s TSMC to dominate 61 percent of the on-demand foundry market.

The JoongAng Ilbo found no Korean names in the global top 10 packaging company list. Korea’s share in the global packaging market fell to 4.3 percent last year from 6 percent in 2021. Korea cannot keep up with Taiwan and the United States in advanced packaging and is being closely chased by Malaysia and China in packaging for general-purpose chips. Equipment and parts makers who recently visited a semiconductor exhibition in China lamented that they could vanish from the market in 10 years, having witnessed the rapid advance by Chinese packaging companies. Samsung Electronics and SK hynix rely on overseas companies for more than 95 percent of their equipment and materials for advanced packaging.

Advanced packaging requires close collaboration between chipmakers and parts suppliers. But small companies in Korea don’t know what their local majors want — and their products are rarely verified by their major clients. They call for Taiwan-like government support where new local products can be tested and verified in assemblies of large producers like TSMC and ASE. The Chinese government even pays for those packaging companies’ insurance coverage against the potential losses from using local materials in chipmaking. The government must offer more attention and support so that smaller packaging companies can get their chance of having their products verified by major players.

Factory locations and staffing also require government attention. Adding factories in cities in Gyeonggi — Hwaseong, Yongin and Pyeongtaek — where chip facilities are clustered is difficult due to stifling regulations around the capital. But suppliers cannot find workers if they go elsewhere. The government must provide the infrastructure to promote youth mobility. The National Assembly must hurry in approving the bills related to chip promotion, AI and electricity infrastructure to vitalize the chip habitat. There is much work to be done, and little time left.