Taiwan is the leading nation in semiconductors, with TSMC (Taiwan Semiconductor Manufacturing Company) dominating a large share of the global market. As of early 2024, TSMC controls more than 61.7% of the semiconductor foundry market, making it one of the most crucial businesses globally. However, there’s another key player in the semiconductor supply chain—Samsung. The South Korean giant ranks second to TSMC, commanding over 11% of the market. While Samsung often operates in the shadow of TSMC, the gap between them is vast. Still, Samsung is not far behind and has ambitious plans to catch up, potentially positioning South Korea as a global semiconductor powerhouse. But how will Samsung achieve this bold vision? To answer that, let’s take a quick look at the history.
South Korea’s rise as a leader in semiconductors dates back to the 1960s, a time when the country was primarily focused on agriculture and light industries, recovering from the Korean War. The government, under President Park Chung-hee (1961–1979), recognized the importance of industrialization and technological innovation as essential for economic growth. This foresight laid the groundwork for South Korea’s future success in semiconductors.
To kickstart this journey, South Korea attracted foreign investment and technology transfers from major global companies. In the 1960s and 1970s, the government offered tax incentives, cheap labor, and a stable political environment to foreign firms, attracting companies like Fairchild Semiconductor, Signetics, and Motorola to set up manufacturing plants in the country.
But South Korea had bigger ambitions. The government didn’t want the country to just be a manufacturing base for foreign firms; they aimed to build local companies into global players. They introduced policies that encouraged local entrepreneurs to invest in the technology sector. The country’s largest conglomerates, or chaebols, soon took interest.
By the early 1980s, one such chaebol was Samsung. At the time, Samsung Electronics was growing but had not yet entered the competitive semiconductor industry, which was dominated by Japanese companies. Lee Byung-chul, Samsung’s founder, saw an opportunity and, in 1983, took the bold step of entering the semiconductor market, focusing on memory chips like DRAM (Dynamic Random-Access Memory). This was a high-risk move because semiconductors required vast capital investment, cutting-edge technology, and manufacturing expertise, areas where Samsung lagged behind Japan and the U.S.
To bridge this gap, Samsung partnered with U.S. semiconductor leaders like Micron Technology and Texas Instruments. These alliances provided the technology and expertise that Samsung needed to fast-track its entry into the semiconductor market.
The partnerships were vital to Samsung’s early success, allowing it to quickly overcome technological barriers and compete globally. Samsung also adopted a “learning-by-doing” approach, investing heavily in research and development (R&D) to build its own technological capabilities. By the late 1980s, South Korean companies were not only assembling semiconductors for others—they were designing and producing their own memory chips. Samsung soon emerged as a global leader in DRAM production, a title it holds to this day.
But Samsung wasn’t the only player in South Korea’s semiconductor story. Hyundai Electronics (now SK Hynix) and LG Electronics also entered the semiconductor market in the 1980s, contributing to the country’s rise. Like Samsung, these companies formed strategic alliances with foreign firms and invested in manufacturing capacity to compete on the global stage.
By the 1990s, South Korean companies had achieved technological breakthroughs in DRAM production, becoming global leaders in the field. Samsung, in particular, became the world’s largest producer of DRAM. At the same time, the company diversified into NAND flash memory, a key component for smartphones, tablets, and other digital devices. Samsung’s dominance in both DRAM and NAND helped cement its position as a major player in the global semiconductor industry.
In the 2000s, Samsung expanded its reach into logic chips, investing in the development of application processors for mobile devices. The company’s Exynos processors, launched in the early 2000s, became a critical part of its smartphone strategy. Samsung also entered the foundry business, producing chips for other companies, further diversifying its semiconductor portfolio.
As the smartphone revolution took off in the 2010s, Samsung was at the forefront, not only as a smartphone maker but also as a key semiconductor supplier for global tech giants like Apple. By producing critical components such as DRAM, NAND flash memory, and application processors, Samsung positioned itself as an indispensable player in the mobile device ecosystem.
In recent years, Samsung has continued to push the boundaries of semiconductor technology. By the mid-2010s, the company began producing cutting-edge 7nm and 5nm chips using extreme ultraviolet (EUV) lithography. By 2022, Samsung had started mass production of 3nm chips using GAA technology, placing it among the first companies globally to achieve this milestone.
In 2021, Samsung made waves by announcing a $150 billion investment plan to expand its semiconductor business by 2030, with a goal to surpass TSMC. This investment includes the construction of new factories, such as the $17 billion semiconductor plant in Taylor, Texas, expected to be operational by 2024.
Samsung’s ambitions are clear—it wants to close the gap with TSMC and become the world’s largest chipmaker. While the competition is fierce, Samsung’s financial strength, innovation, and chaebol status in South Korea give it the potential to challenge TSMC’s dominance in the global semiconductor industry.