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Korea at risk of losing its edge in manufacturing

Published: 22 Aug. 2025, 00:03

Oh Se-jung

The author is a professor emeritus of physics and astronomy and a former president of Seoul National University.

The recent “DeepSeek shock” gave many people a vivid sense of China’s rise in artificial intelligence. But today, China is not demonstrating technological strength only in AI. Korea’s manufacturing industries — steel, petrochemicals and shipbuilding — are all suffering from China’s threat. Of course, there are fields such as semiconductors where Korea has barely managed to maintain an edge, but what was once laughed off as “the continent’s mistakes” has now become “the continent’s capabilities,” posing a serious challenge. Looking back at history, U.S. manufacturing, once overwhelming after the Second World War, yielded leadership to Japan, and Japan, in turn, lost many sectors to Korea in the age of digital transformation. Now, Korea itself faces the danger of losing manufacturing leadership to China. But if Korea is deprived of its advantage in manufacturing, it will be difficult to survive in the global economy.

The Seoul National University's main gate in Gwanak District, southern Seoul. [SEOUL NATIONAL UNIVERSITY]

How, then, should Korea respond to China’s threat? The model answer is probably to concentrate on high-value-added fields through the advancement of technology. Korea’s shipbuilding industry, which has responded to China’s volume offensive by focusing on technologically demanding sectors such as LNG carriers, can be seen as a good example. But technology ultimately comes from people. In other words, the competitiveness of manufacturing comes from the excellence of research and development personnel. The process by which the leadership of the LCD industry passed from Japan to Korea shows this well. In fact, until the 1990s, Japan was the world’s unchallenged leader in both LCD technology and production. Then, in the late 1990s, bold investment by Korean companies enabled them to surpass Japan. I once asked the head of a Korean company who made such large-scale investments at the time, “What gave you the confidence to make such a risky move?” His answer was memorable: “When I looked at Japan’s engineers, I saw they were all aging. I believed Korea’s young and ambitious researchers could prevail.” Expecting an answer about “the vision of top management,” I was struck instead by his emphasis on the importance of engineers — an answer I still remember.

Unfortunately, Korea today is beginning to resemble Japan’s situation at that time. Capable research and development personnel are aging, while young people are turning away from science and technology. Unless this problem is resolved, national policy goals such as “emerging as a top-three AI power” or “an industrial renaissance through innovation” are likely to remain empty slogans. Let us first look at the causes. The first is demographic decline. According to research by Cho Young-tae, a demographer at Seoul National University, with the decline of the youth population, it is expected that in five to 10 years even the so-called SKY universities will struggle to fill graduate programs in science and engineering. Some science and engineering departments at Seoul National are already barely filling their quotas.

Korea University graduates throw their graduation caps in the air on the day of their graduation ceremony on Feb. 25. [YONHAP]

The second is the extreme preference for medical schools. In Korea, many students, regardless of aptitude, try to enter medical school because it guarantees a stable income. There are even “pre-med classes” in the private education market for elementary school students. Recently, even students who entered Seoul National University to pursue their fields of interest in science and engineering say they feel their pride weakened by the view around them that they are “losers who failed to get into medical school.” This is in stark contrast with China, which regards scientists and engineers as the highest profession and identifies outstanding talent in science and technology through gifted education programs beginning in elementary school.

The third is the shortage of good jobs in science and engineering. Today, large numbers of Korean experts in these fields are going abroad. According to the Ministry of Science and ICT, more than 96,000 science and engineering master’s and doctoral degree holders have gone overseas in the past ten years, since 2013. In the past, many people who earned degrees abroad returned to Korea, but now the situation is reversed. My own experience in Silicon Valley in 2019 was shocking. At that time, Seoul National University was preparing to establish an artificial intelligence research institute using a 50 billion won ($35.8 million) donation from the late Kim Jung-sik, chairman of Daeduck Electronics. While interviewing Korean scientists working in Silicon Valley to encourage them to return home, I found that of about 50 participants, only one expressed interest. The difference in salary, research autonomy and working conditions was simply too great.

As such, Korea now faces many problems in training and utilizing science and engineering talent domestically. To address this, proposals have been made to attract outstanding foreign students and support their settlement in Korea, to improve the economic status of graduate students and to create an admissions system that recognizes diverse abilities. To prevent the outflow of trained talent, performance-based reward systems, a free research environment and predictable government policies must be realized. Ultimately, this problem can only be solved through joint efforts by multiple government ministries and the private sector, requiring a national-level comprehensive strategy. But regrettably, such efforts are nowhere to be seen.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.