How South Korea spends its semiconductor windfall will define the AI era, minister says

Minister of Trade, Industry and Energy Kim Jung-kwan said Thursday that "how we use the money earned from semiconductors will be the great battleground of the AI era."

Speaking at the 49th Korea Chamber of Commerce and Industry Jeju Forum at the Shilla Hotel Jeju on Thursday, Kim said there is much talk of a semiconductor windfall and a social debate over how to spend it. "I am right in the middle of that debate," he said.

Kim said semiconductors, once a critical component, have become critical infrastructure in the AI era, prompting countries such as the United States and China to pour in investment exceeding their sales figures. "South Korea currently accounts for just over 60 percent of global DRAM output, but looking at the current pace of fab construction, our share appears set to fall to the mid-to-upper 50 percent range — which is why speed is critical," he said.

He added that a semiconductor boom does not mean the entire economy is booming, and said the semiconductor industry itself has no choice but to lose market share if it does not push investment forward with full force.

Kim also invoked the biblical story of Joseph, noting that Joseph, after becoming prime minister of Egypt, stockpiled grain during seven years of plenty — which gave Egypt the power to buy up land from other nations and command their submission during the seven lean years that followed. "I believe we must approach the semiconductor market's boom from the same perspective," he said.

He cautioned against assuming that strong corporate profits will last simply because semiconductors are performing well. "Even the semiconductor market's continued strength is uncertain. Some say it has entered a structurally favorable cycle, but no industry stays in a boom forever," he said. "We must draw the lesson from the story of Joseph."

Kim identified three key battlegrounds South Korea must navigate: AI, regional development and ecosystem building.

"Every administration talks about growth and growth potential, but bluntly speaking, our growth rate has been in freefall," he said. "We are at a major crossroads over whether our economy can reverse course, and the global order is shifting so dramatically that the entire board is shaking."

Kim said that when the board shakes, corporate and national rankings change. "Industries and countries that were once thriving can suddenly fall in the rankings, while companies that stay sharp have the opportunity to rise," he said.

He drew an analogy to the board game of Go, saying a wrong move at a critical juncture is fatal in a way that an ordinary mistake is not. "The same applies to the economy — a wrong decision at a pivotal moment leaves no room for recovery," he said.

On regional development, Kim said pouring investment into the greater Seoul area — which he likened to a fully grown tree — would do little to reverse the country's declining growth rate. "If investment flows into the regions, which are like saplings, and jobs are created there, we can expect a markedly different picture in a relatively short period of time," he said.

Kim acknowledged the political difficulty of a growth strategy centered on the regions, given that the greater Seoul area holds 20 million swing voters. "Even so, a small sapling will wither and die without water, and South Korea's growth will inevitably collapse," he said.

On ecosystem building, Kim said businesses, local governments and the central government are all working hard but separately. "In the AI era, the key is building an ecosystem where they work together," he said. "For semiconductors, no single company can secure electricity, water and land on its own — fail to build that ecosystem and the outcome is obvious."

He added that the three battlegrounds — AI, regional development and ecosystem building — are ultimately intertwined. "The AI era demands enormous investment, but in the greater Seoul area you cannot find land, electricity or water," he said.