In a bid to advance its semiconductor industry and reduce its dependence on other leading players in the market, South Korea has announced a significant investment in the development of semiconductor packaging technology. According to reports from Korean media, the country will allocate 274.4 billion won, which is about $200 million, to a national semiconductor packaging R&D project that is crucial for the production of high-performance, low-power chips essential for AI applications.

This investment is part of South Korea's broader strategy to close the gap with Taiwan, mainland China, and the United States in the semiconductor back-end process market, where it currently has a market share of less than 10%. In contrast, the Ministry of Science and ICT in South Korea has reported that by 2022, the country is expected to hold a 60% share of the storage chip market.

The R&D expenditure plan has already passed the initial feasibility test by the Korean Ministry of Science, indicating that the government has approved a seven-year project that will run until 2031. This initiative is a follow-up to the national semiconductor packaging R&D project conducted between 2018 and 2022, which was valued at 65 billion won.

Semiconductor manufacturers are focusing on improving back-end processing or packaging technology to meet the growing demand for high-end chips such as High Bandwidth Memory (HBM) in the AI boom. This focus comes as semiconductor miniaturization has reached its physical limits.

Yole, a market research firm, predicts that by 2028, the advanced semiconductor packaging market will grow at a compound annual growth rate of 10%, increasing from $44.3 billion in 2022 to $78.6 billion.

This investment underscores South Korea's commitment to strengthening its position in the global semiconductor market and ensuring its technological competitiveness in the era of artificial intelligence.