Editorials
China’s chip challenge demands a rethink of Korea’s economic policies
CXMT’s next-generation memory push and a sharp Kospi sell-off expose risks to Korea’s semiconductor-led economic outlook.
An electronic board at Hana Bank's trading room in Jung District, central Seoul, displays the Kospi index and closing share prices of Samsung Electronics and SK hynix on Oct. 13. The Kospi plunged 348.89 points, or 5.46 percent, from the previous session to close at 6,035.35, while the Kosdaq fell 12.16 points to finish at 837.03.
NEWS1
orea’s stock market, which had rebounded toward the 7,000-point mark amid a semiconductor boom, has plunged again. The Kospi, which closed at 6,035.35 on Tuesday, fell into the 5,000-point range during trading, triggering a sell-side trading curb for the first time in two months.
Concerns that AI-driven semiconductor demand may be peaking, compounded by technological advances in China, have raised doubts about the rally’s sustainability. U.S. chip stocks weakened, while Samsung Electronics and SK hynix plunged 7.39 percent and 10.09 percent, respectively.
The immediate trigger was Chinese chipmaker CXMT, which announced plans to launch server dynamic random-access memory using next-generation 4F2 technology this year.
The architecture reduces memory cell area by 33 percent compared with the prevailing 6F2 design, increasing chip density. Some analysts suggest successful commercialization could put CXMT two to three years ahead of Korean manufacturers.
China’s mass-production capabilities remain unproven, making it premature to declare a technological reversal. Nevertheless, concerns are growing that China could replicate its “lane-changing” strategy, used to catch industry leaders in telecommunications and electric vehicles, in semiconductors.
Against this backdrop, Samsung Electronics memory chip employees earning annual salaries of 100 million won ($75,000) are set to receive performance bonuses approaching 1 billion won. Such generous rewards could become a fleeting memory if Korean companies lose their technological edge.
The government must also reconsider policies built on expectations of a prolonged semiconductor boom.
It raised growth forecasts, expanded spending, proposed a budget exceeding 820 trillion won for next year and established plans for a 160 trillion won fund to prepare for future challenges. Yet expansionary fiscal policies could become unsustainable if semiconductor prosperity fades.
At a Korea Development Institute forum Monday, participants warned that Korea’s industrial competitiveness is already declining outside semiconductors and that the economy could contract around 2030.
The warning suggests that government expectations of additional semiconductor-related tax revenue and surprisingly strong economic growth exceeding 3 percent this year could prove short-lived.
The assumptions underpinning optimistic economic projections are becoming increasingly uncertain. Policymakers must therefore shift toward strengthening fiscal sustainability, while companies accelerate technological innovation to maintain a decisive competitive advantage.
Korea cannot afford to treat the semiconductor boom as a permanent guarantee of prosperity. Its economic resilience depends on stronger competitiveness across industries, disciplined public finances and continued investment in advanced technologies.
The stock market has sounded a warning. The government and businesses must respond promptly rather than assume another rebound will resolve the underlying vulnerabilities.
It is time to reassess priorities, prepare for tougher competition and redouble efforts to secure Korea’s economic future.
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.
