[Chip Talk] Partner With Japan, Keep Localizing: K-Semiconductors' Two Challenges

Samsung to Invest 350 Billion Won in Advanced Packaging Research Center in Yokohama
SK hynix Holds First Partners Day in Japan... Strengthens MPE Cooperation
"Pragmatic Cooperation Needed Beyond Historical Issues... Domestic MPE Industry Must Also Be Developed"

Samsung Electronics and SK hynix, which accelerated efforts to localize production in response to Japan's 2019 export restrictions on semiconductor materials, have recently been expanding cooperation with Japan. At the time, their top priority was to reduce their dependence on Japanese materials. Now, however, they are pursuing joint research and development with Japanese companies and even sharing mid- to long-term production plans. Some say that South Korea should make active use of Japan's materials, parts, and equipment (MPE) technologies to strengthen its competitiveness in advanced semiconductors, while also building the competitiveness of domestic companies.

Samsung Electronics Chairman Lee Jaeyong visits the company’s advanced semiconductor packaging research center in Yokohama, Japan, on the 1st to review the status of research into key packaging technologies. Samsung Electronics

According to industry sources on Nov. 14, Samsung Electronics Executive Chairman Lee Jae-yong recently visited the Advanced Package Lab (APL), an advanced semiconductor packaging research center in Yokohama, Japan. Opened in September, APL is a facility established by Samsung Electronics to develop advanced packaging technologies with Japanese MPE companies. Samsung Electronics plans to invest approximately 350 billion won through 2028 to strengthen its research and development capabilities.

The company is also seeking to recruit technical staff in Japan. Since last month, Samsung Electronics' Japanese subsidiary has been recruiting staff in Yokohama to evaluate advanced semiconductor packaging materials and develop processes, offering annual salaries of 8 million to 18 million yen (approximately 68 million to 153 million won). The new hires will work with Japanese materials and equipment companies to develop redistribution layer (RDL) interposer technology, which connects semiconductor chips. The move signals an effort to work with local companies from the technology development stage, rather than simply purchasing Japanese materials and equipment.

Japan remains highly competitive in advanced packaging. Ibiden is strong in high-performance semiconductor package substrates, while Ajinomoto has an edge in ABF, an insulating material used in semiconductor substrates. As technologies for precisely connecting multiple chips become increasingly important to improving the performance of artificial intelligence (AI) semiconductors, the strategic value of materials and equipment held by Japanese companies is also growing.

SK hynix is also stepping up cooperation with Japanese MPE companies. More than 20 local MPE companies, including Shin-Etsu Chemical, JSR, and Tokyo Electron, attended its first Partners Day event in Chiba Prefecture, Japan, last month. SK hynix shared its mid- to long-term business direction and technology development plans with its partners. The move is intended to encourage them to secure the necessary capital investment and supply capacity in advance, in line with future increases in memory production.

This move also aligns with the vision for South Korea-Japan economic cooperation that SK Group Chairman Choi Tae-won has consistently emphasized. Since 2023, Choi has proposed forming a South Korea-Japan economic alliance, arguing that the two countries should combine their respective industrial strengths. In June, he also pointed to the possibility of investing in Japan, saying that the country has an ecosystem necessary for production, including power and semiconductor materials.

Choi recently reiterated the need for economic cooperation between South Korea and Japan during a special lecture at Seoul National University’s Department of Economics. He said that the country was being pushed into a position where it had to give up one of the two markets amid the rivalry for dominance between the United States and China, adding, “Japan is the partner we need most right now.” He continued, “If South Korea’s $2 trillion economy and Japan’s $4 trillion economy are joined, the impact will be more than three times as great.”

Experts also emphasize the need for pragmatic cooperation with Japan in the semiconductor industry. Kim Yong-seok, a distinguished professor at Gachon University’s College of Semiconductor Engineering, said, “There is no need to maintain hostile relations with Japan by focusing solely on historical issues such as Japanese colonial rule.” He added, “Given Japan’s strong competitiveness in materials, parts, and equipment for semiconductors, we should expand cooperation from a pragmatic perspective.” He also said, “We need to promote people-to-people exchanges, with young Korean talent taking jobs at Japanese companies and Japanese talent working at Korean companies.”

Some, however, warn that expanding cooperation with Japan must not weaken the competitiveness of South Korea’s domestic MPE industry. Since Japan imposed export restrictions in 2019, domestic companies have made progress in localizing some key materials, such as hydrogen fluoride. However, dependence on overseas suppliers remains high in materials and equipment needed for advanced semiconductor processes. The view is that South Korea should work with Japanese companies while also pursuing technology development and securing sales channels for domestic MPE companies.

An industry source said, “The assessment is that, apart from a few leading companies such as Hanmi Semiconductor, not many companies in South Korea’s MPE industry are competitive in the global market.” The source added, “South Korea’s semiconductor industry ultimately faces the dual challenge of using Japanese technology to strengthen its competitiveness in advanced semiconductors while also reinforcing the foundations for self-reliance in its domestic MPE industry.”

This content was produced with the assistance of AI translation services.