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Semiconductors – A flagship product in the South Korean Economy

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Did you know that among the products that Korea trades most with foreign countries are semiconductors? This type of material has been of vital importance for technological development worldwide. They can be found in computer and cellular chips, household appliances, and solar cells.

By the year 2020, this industry accounted for 19.4% of Korea’s exports, and this sector is expected to have an annual growth of 5.4%. Currently, Korea ranks 2nd in the world semiconductor market, second only surpassed by Taiwan.

However, how did Korea become a powerhouse country in these products, and which are the most representative companies in this field?

Semiconductors are materials with intermediate electrical conductivity properties. Under normal temperature conditions, they are usually insulators. However, as they are subjected to higher temperatures or are illuminated, they can become electrically conductive. To know how conductive or insulating material is, we must resort to the energy band diagram. These have a region known as a bandgap. 

For semiconductor materials to conduct electricity, energy (either in the form of light, thermal or electrical energy) must be supplied.

Diagrama de bandas de energía en aislantes, semiconductores y conductores. A medida que la brecha de energía prohibida es mayor, el material aísla más la electricidad.

Therefore, these type of materials are used in electrical circuits since they allow controlling current flow from one side to the other using the binary language of the machines (0 and 1, where being zero no current flows and being one current flows).

Semiconductor

Between the most common used semiconductors materials are the following:

  1. Silicon
  2. Germanium
  3. Selenium

The Korean semiconductors industry began in the mid-1960s assembling devices produced by countries such as Japan and the USA. However, due to this beginnings, Korea realized that it was a country dependent on this type of products, so it began an ambitious industrialization plan (promoting the national industry of electronics such as memory devices, silicon wafers, etc.) and finally in 1995 three enterprises (known as Chaebols) became consolidated as the best in the world in semiconductor production:

  1. Samsung Electronics
  2. LG Electronics
  3. Hyundai Electronics

 

One characteristic of the Korean industry that allowed it to grow exponentially during the period 1983-1996 was the mass production of DRAM memory devices. The fundamental principles followed by Korea to achieve a developed country based on heavy and chemical industrialization were as follows:

  1. Promote intensively six strategy industries: Steel, electronics (based on semiconductors manufacturing), heavy machinery, metal alloys industries different to steel and ferrous materials, oil refining, and chemical industry.
  2. Export-oriented production except for a small portion of imports to substitute for domestic consumption goods.
  3. Build large-scale production facilities to become internationally competitive.

 

Despite being a country with few natural resources, industrial and economic policies based on fostering strategic industries within the framework of chemical specialties and advanced engineering materials industry succeeded in placing Korea among the world’s most powerful economies in 30 years. 

In conclusion, the economic growth model implemented by Korea since the mid-20th century can be an applicable model for Latin American countries which possess a wide variety of natural resources for chemical specialties manufacturing such as computer chips, petrochemical products, heavy machinery industry, etc. However, this model has not been possible to carry out because it requires a strong investment in research and development which has been neglected in recent years and is the root of the development that a country can have. In 2018 Korea invested 4.5% of GDP in research and development contrary to countries like Colombia which invested 0.235% of its GDP. Some diplomatic relations such as the Korean government scholarships (GKS) which encourage technological development and friendship between other countries and Korea can help the industrialization of developing countries, but these strategies must be combined with government investment and ambitious plans to make them self-sufficient.

Written by: Felipe Puentes

Edited by: Angie Salavarria

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