For half a century, Taiwan and South Korea have been competitors in many different industry sectors, from shoemaking, garment, refrigerators and TVs, to PCs, handsets and semiconductors. In the 1990s, Taiwan took the lead in the computer industry, and many Taiwanese would proudly declare that the Koreans had been defeated.
In the handset era, South Korea positioned itself as the hub in CDMA communications, and leveraged Qualcomm to turn the domestic market into the most advanced application field in the world. Along the way, the development of cultural and creative industries and networking business gained tremendous momentum. South Korea created its own unicorn businesses; Taiwanese were envious, but had no answer to that.
As for the highly coveted semiconductor industry, Taiwan focuses on IC design and foundry, while South Korea has a clear lead in memory. Taiwan and South Korea have their respective strengths, but neither of them are self-sufficient in equipment or materials.
As the industries head into the era of Internet of Things (IoT) and electric vehicles (EZ), more opportunities for cooperation are emerging alongside the competition between Taiwan and South Korea. And from the import/export data of these countries we can deduce the "codes" of their industrial developments.
From the trade statistics for the first 11 months of 2022, it's estimated that Taiwan's trade surplus in electrical and electronic products will be around US$130 billion in 2022, while South Korea's trade surplus may be around US$80 billion. Among them, Taiwan's semiconductor industry will see a surplus of more than US$90 billion, and South Korea's about US$60 billion.
From the trade data of electronic and electrical products, we can see that Taiwan's non-electronic sectors account for US$40 billion, but for South Korea it is only US$20 billion. Taiwan surpasses South Korea not only in terms of scale, but also in terms of trade quality and diversity.
South Korea's economic and industrial structure is built on big enterprises, which gives it leverage in making technological breakthroughs and long-term investments. But when handling diversified business opportunities, it is often stretched to the limit. And when a gigantic rival steps up the challenge - such as that from TSMC who can make strong profits and massive long-term investments - South Korean companies will find it hard to compete.
In fact, Samsung Electronics and TSMC embrace similar strategies, and the loss of one or two customers to Samsung will not change the look of the industry.
The supply chain has passed its peak, and with the economy unlikely to rebound in the first quarter of 2023, the South Korean semiconductor industry's profitability won't offer much surprise. If South Korea didn't have the trade surplus from its semiconductor industry, the country's trade deficit would exceed US$100 billion a year. If any conflicts take place across the Taiwan Strait, the supply chain that relies heavily on big Taiwanese companies will not be able to function properly. And US$200 billion to US$300 billion in working capital will be at stake.
Could South Korea emerge as a winner in post-conflict reshuffle of international order? If South Korea and Taiwan fell, would Japan be unscathed and able to profit?
If the collapse of the global economy starts from these three East Asian countries, the poor people in South Asia and Africa may not even be able to afford food because of inflation and economic depression. Then how will this modernized world work?
Taiwan is the foundation of global stability, just like its "anchor." Don't you think that the world has nothing to do Taiwan. As long as Taiwan is alive, the world will be stable. If Taiwan becomes an inseparable part of China, the world will go around in a different form.
If Samsung Foundry's profit exceeds that from memory, and this foundry division is constantly pummeled by TSMC, then Samsung, and even South Korea as a whole, will be seeing risks lying ahead.
