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The semiconductor crisis

Aug 18,2018
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Suh Kyoung-ho
The author is an editorial writer at the JoongAng Ilbo.

Dynamic random access memory (DRAM) is an art, proclaims Lee Jong-ho, a professor of electrical and computer engineering at Seoul National University (SNU) and director of the Inter-University Semiconductor Research Center. “The structure itself is a thing of beauty. The aspect ratio or the proportion of width versus height of the nano building block of the memory cell is equivalent to the 829.8-meter (2,722-feet) tall Burj Khalifa, the landmark skyscraper in Dubai,” he explains. DRAM is much simpler in form and circuitry than a central processing unit, the computer circuitry responsible for basic arithmetic performance. Yet few companies can dare compete in the game because of the two dominant players, Samsung Electronics and SK Hynix. “Countless trials and errors of each Korean engineer are reflected in every chip-making process and technology,” he says.

Korea’s chipmaking technology and its mastery of the art of memory chips has long been an object of envy for China, which aspires to become a technology powerhouse. Hwang Cheol-seong, an SNU professor of materials science and engineering, is a highly-accredited scholar in semiconductors, having written over 500 papers on the subject. After finishing his lecture in a semiconductor workshop in Beijing last month, he was bombarded with questions from Chinese professors and students. The Q&A session stretched to two hours. He had to eventually flee the room to barricade himself in his hotel room. He has long been chased by Chinese local governments and consulting companies. China’s semiconductor industry has been hunting for Korean engineers and is now reaching out to scholars. It is that desperate to learn Korea’s chipmaking technology.

The air at the Icheon campus of SK Hynix in Gyeonggi was heavy when I made a visit last week. The world’s second largest DRAM maker remains determined to guard its front-tier position. A supercycle with overwhelming demand compared to tight supply has fueled the memory chip industry since 2016. But now it is fizzling out. Oversupply will likely push down prices next year when ramped-up lines become operational in Korea and China begins mass production of memory chips. China may become self-sufficient in the lower-end memory chips.

But Korean chipmakers won’t easily be pulled down from their commanding heights. They have survived the merciless game of chicken against multinational players for decades now. They have built resilience and have come out stronger after every challenge. Samsung Electronics and SK Hynix need not be overly anxious about the aftermath of a boom and China’s ascension. They just need to keep up their pace with eyes directed forward instead of behind. They must continue to explore uncharted waters and raise the bar in chip technology to stay ahead. Yet the research front has become somewhat shaky.

Prof. Hwang said the future is dark predominantly due to a brain drain. Hwang remains the sole expert in semiconductors among 41 on the faculty of the SNU materials science department. Since semiconductors are a mature field of study, it is not easy to achieve a milestone in the field. Famed journals like Nature and Science rarely publish semiconductor papers. This is one reason why research has become less appealing. Postgraduate and doctorate degrees in semiconductors from SNU totaled 23 in 2016, compared to 97 in 2006.

“We need 10 times more brain power in the study of semiconductors to supply the semiconductor, equipment and materials sector. But that looks impossible,” Hwang said.

State sponsorship of research and development in semiconductors is also scant. Government subsidies shun semiconductor projects because they regard the sector as already rich with cash and think it doesn’t need further help. Funding to the semiconductor area fell sharply over the last five years.

Park Jea-gun, head of the Korean Society of Semiconductor & Display Technology, said state subsidies for semiconductor R&D mostly go to small and mid-sized equipment and materials companies or universities. He argued that more attention is needed to keep up the semiconductor habitat and Korea’s competitive edge going into the fourth industrial revolution.

Korea’s localization of semiconductor equipment accounts for just 20 percent. Local chipmakers make investments of billions of dollars annually, and a large amount goes into purchasing equipment from overseas. Minister of Trade, Industry and Energy Paik Un-gyu pledged support to develop next-generation memory chips and the relatively weaker non-memory sector. Anti-chaebol sentiment must not be allowed to do harm to the future of the semiconductor industry, which is responsible for 20 percent of Korea’s exports and 25 percent of the main stock exchange’s market capitalization.

China is making strides in chipmaking thanks to heavy government support. Korea’s state funding to semiconductors is withering away. The semiconductor industry can face up to challenges — but it doesn’t have to face them all alone.

JoongAng Ilbo, Aug. 17, Page 28