South Korea

Intelligence for Better Decision Making

Shifting Dynamics in South Korea’s Semiconductor Industry Amid Global Competition

Jan. 8, 2026 | Competitiveness

South Korea’s semiconductor industry demonstrates robust global leadership alongside evolving challenges, supported by strategic domestic and international policies.

**South Korea’s semiconductor sector relies on SK Hynix and Samsung Electronics, which together control 80 percent of the global high-bandwidth memory market.**
This hardware dominance supports a domestic full-stack AI environment built on advanced 5G networks, proprietary models such as Naver’s HyperCLOVA X, and extensive data streams from super apps like Kakao and Naver. The country also leads the world in industrial robot density, strengthening its capabilities in physical AI applications.

**However, the ecosystem faces internal challenges including a shrinking AI talent pool as skilled professionals migrate to US tech firms, leaving South Korea last among OECD countries in net AI talent inflow.**
Companies rely heavily on American AI platforms and foreign capital for data infrastructure, while stringent data regulations restrict training. Occasional power shortages also threaten operational stability in semiconductor fabs.

**Micron Technology is expanding its next-generation HBM4 capacity to 15,000 wafers per month by 2026—roughly 30 percent of its planned 55,000-wafer total—to meet demand from NVIDIA’s “Vera Rubin” AI accelerator.**
The company has already begun equipment investments, plans to boost output in the second quarter, and will launch HBM4 mass production in February. Micron, Samsung, and SK Hynix will coordinate supplies according to NVIDIA’s performance evaluations in the first half of the year. By year-end, an advanced packaging plant in Singapore and, in the second half of 2027, Micron’s Hiromisa plant in Japan will add further capacity.

**China’s semiconductor industry has closed the gap with South Korea, surpassing it in system chip design, infrastructure, and a network of over 3,500 fabless companies versus South Korea’s roughly 150.**
The Korea Institute for Industrial Economics and Trade reports that China outperforms South Korea in 19 out of 30 semiconductor-industry criteria—ranging from R&D to pricing and finished-product services—despite US sanctions. Huawei and Cambricon now produce advanced AI chips domestically, and China pursues leadership across robotics, electric vehicles, batteries, and self-driving cars under its “China Standards 2035” initiative, including the first national standard for EV solid-state batteries.

**The government and ruling party have designated semiconductors as a core growth engine in their 2026 economic strategy, advancing the Special Act on Strengthening and Supporting the Competitiveness of the Semiconductor Industry toward final approval.**
The act aims to position South Korea among the world’s top two semiconductor powers. The economic plan also targets growth in defense, biotechnology, and cultural exports, restructures petrochemicals and steel, advances AX and GX transitions, and promotes regional development through RE100 industrial complexes and gift certificate programs. Financial measures include macroeconomic interventions, long-term domestic stock investment via the National Growth Fund, and tax incentives to channel liquidity into high-growth and venture capital funds.

Autonomous Driving and Robotics Breakthroughs Unveiled at CES 2026

Jan. 8, 2026 | Technology & Innovation

Leading automotive and technology firms revealed groundbreaking robotic and autonomous driving innovations at CES 2026 in Las Vegas.

**On January 6, Chung Eui-sun, Chairman of Hyundai Motor Group, attended CES 2026 to explore cooperation opportunities with major technology companies.**
His visit, following an economic delegation tied to President Yoon Suk-yeol’s state visit to China, represents Hyundai’s effort to strengthen ties with leading tech firms and accelerate progress in robotics and autonomous driving.

**At Hyundai’s booth, Chung reviewed demonstrations of its next-generation robot platform Mobed, the humanoid robot Atlas, and the Ioniq 5 robotaxi.**
He met with executives from Boston Dynamics and Google DeepMind Robotics to discuss technology roadmaps and integration challenges. This initiative reflects Hyundai’s strategy to integrate advanced robotics into its future mobility solutions.

**Chung explored Qualcomm’s high-performance Dragonwing IQ10 processor, signaling Hyundai’s interest in diversifying its chip partnerships beyond NVIDIA and Google.**
He also tested LG Electronics’ AI cockpit and autonomous driving systems for potential use in Hyundai vehicles. At Samsung Electronics, he proposed joint robotics initiatives to President No Tae-moon.

**He concluded the day with NVIDIA CEO Jensen Huang, reaffirming an October agreement for Hyundai to acquire 50,000 Blackwell AI chips.**
Both leaders pledged to fast-track the development and deployment of Hyundai’s proprietary AI models, leveraging this AI infrastructure to enhance in-vehicle intelligence and autonomous capabilities.

**Meanwhile, NVIDIA launched Alpamayo, its first AI system specifically for self-driving cars.**
After the launch, Jensen Huang discussed the new platform with Mercedes-Benz Chairman Ola Källenius and Executive Chair Euisun Chung. Industry speculation suggests Hyundai may adopt Alpamayo to advance its autonomous driving efforts, as it currently trails competitors like Tesla in Level 2+ technology and aims to introduce similar systems in mass-market vehicles by the end of 2027.

**Mercedes-Benz became the first automaker to adopt Alpamayo, incorporating the AI-powered system in the upcoming CLA model debuting in the US in Q1 2026 before a broader rollout.**
Alpamayo’s open-source framework combines vision-language-action models for interpreting visual data, large reasoning modules for complex scenarios, simulation tools for rare or hazardous events, and open datasets for extensive training and validation.

**Addressing concerns about memory supply, Huang emphasized NVIDIA’s role as a leading user of HBM4 high-bandwidth memory technology and cited strong support from Samsung Electronics and SK hynix.**
He said NVIDIA’s demand will drive expanded production capacity, minimizing the risk of shortages and ensuring a steady supply for AI chip development.

Monitored Intelligence for South Korea - Jan. 9, 2026

News
Media
278

Government
Releases
16

City/State
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28

Embassy
Releases
0

Foreign
Service
Advisories
0

Academic/
Think
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3

Podcasts
0

Videos
0

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0

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삼성중공업도 MSRA 취득 준비 돌입…美 함정 MRO 사업 역량 제고

Samsung Heavy Industries Begins Preparing to Acquire MSRA… Enhancing Capabilities in U.S. Warship MRO Business

ET News | Local Language | News | Jan. 9, 2026 | UndeterminedMergers & Acquisitions

Samsung Heavy Industries has started preparations to acquire the U.S. Navy Ship Maintenance Agreement (MSRA) to strengthen its position in the U.S. ship maintenance, repair, and overhaul (MRO) market. The company is gathering necessary documentation to prove its qualifications and plans to formally apply for MSRA approval through the U.S. Naval Supply Systems Command soon.

Initially focused on MRO services for non-combatant ships, Samsung Heavy Industries now views MSRA acquisition as crucial due to competitors like HD Hyundai Heavy Industries and Hanwha Ocean having already secured MSRAs, and others preparing to do so. While MSRA is not mandatory for non-combatant ship contracts, it is essential for winning contracts related to combatant ships, making it a key factor for maintaining competitiveness.

The MSRA approval process involves qualification screenings, on-site inspections, security evaluations, and assessments of a shipyard's capabilities, similar to South Korea’s defense contractor designation procedures. Experts believe Samsung Heavy Industries, with its strong global reputation in commercial ships and offshore plants, is well-positioned to obtain MSRA certification.

The company’s collaboration efforts, such as a strategic partnership with Vigor Marine Group for U.S. Navy support ship MRO, are expected to support its MSRA acquisition. After obtaining MSRA, Samsung Heavy Industries plans to actively compete in the MRO market and expand its cooperation to commercial and special-purpose ships, including joint construction projects with U.S. partner shipyards.

Arrest warrant sought for MBK chief in Homeplus probe

Korea Herald | English | News | Jan. 9, 2026 | Corporate Corruption or Fraud

South Korean prosecutors requested arrest warrants for MBK Partners Chairman Michael Byung-ju Kim and other top executives, including Homeplus CEO and MBK Vice Chairman Kim Kwang-il, Vice President Kim Jeong-hwan, and Homeplus CFO Lee Sung-jin. The arrests are related to suspicions that they knowingly issued asset-backed short-term bonds in February 2025 despite foreseeing a potential credit rating downgrade, which preceded Homeplus filing for court receivership, leading to investor losses. The executives face charges under the Capital Markets Act and the Act on the Aggravated Punishment of Specific Economic Crimes.

The investigation followed a fast-track referral from the Financial Supervisory Service (FSS) in April 2025, which also raided MBK and Homeplus headquarters and the executives' residences. Chairman Kim and Vice Chairman Kim were summoned and questioned as suspects last month. Meanwhile, the FSS is continuing its probe and has notified MBK of impending disciplinary actions, including the possible suspension of business operations.

MBK Partners has strongly denied the allegations, asserting that the arrest warrant request is based on a fundamental misunderstanding of the company’s role and intentions as the controlling shareholder of Homeplus. In March 2025, the Seoul Bankruptcy Court approved a court-led restructuring of Homeplus to avoid bankruptcy, but the retailer has not yet made progress in securing a new owner.

Defense chief reaffirms continued S. Korea-U.S. combined drills despite calls for adjustment

Yonhap | English | News | Jan. 9, 2026 | Geopolitical Conflict and Disputes

South Korea's Defense Minister Ahn Gyu-back confirmed that preparations for the annual combined military drills with the United States are proceeding as planned, describing the exercises as a "lifeline" for the armed forces. These drills, conducted twice yearly under the names Freedom Shield and Ulchi Freedom Shield, are emphasized as defensive by both countries but condemned by North Korea as invasion rehearsals. Although currently set to continue without significant changes, Ahn left open the potential for adjustments based on political developments, especially if dialogue between Washington and Pyongyang resumes.

Regarding military modernization, Ahn stated that South Korea aims to deploy a nuclear-powered submarine by the mid-2030s, contingent on smooth progress in securing nuclear fuel through talks with the United States expected to conclude within two years. He also highlighted progress in South Korea's efforts to regain wartime operational control from Washington. The transfer, anticipated within President Lee Jae Myung's term ending in 2030, is advancing through a three-stage readiness verification process, with the Full Operational Capability phase expected to be completed by year-end and the final decision depending on the leaders of both nations.

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