The Research Institute for Democracy, Society and Emerging Technology (DSET) recently contributed an invited commentary to Korea On Point, titled “Beyond Competition in the AI Era: Taiwan-Korea Semiconductor Cooperation.” The article was co-authored by DSET CEO Dr. Jeremy Chih-Cheng Chang and Policy Analyst Charlotte Yu-Ning Chiu, offering an in-depth analysis of the evolving mix of competition and cooperation shaping Taiwan–Korea semiconductor relations in the age of artificial intelligence.
Korea On Point, founded by the Korean Association of International Studies (KAIS), is an online platform dedicated to providing expert-driven analysis on major diplomatic, security, economic, and regional cooperation issues affecting the Korean Peninsula. Articles are published through an editorial-invitation system, featuring a select group of global scholars and practitioners each week.
In the commentary, DSET notes that during the 2025 APEC Summit, the South Korean government described Taiwan as “both a competitor and a partner.” As two export-oriented economies, Taiwan demonstrated strong performance in 2025: revenue among Taiwan’s listed electronics firms grew 17.7% year-on-year, and August exports surged to USD 58.49 billion, reaching a historic high and surpassing South Korea for the first time.
The authors highlight that surging AI server demand has reshaped the bilateral trade structure. Since 2024, South Korea has become Taiwan’s largest trade deficit partner, with Taiwan posting a USD 30.497 billion deficit in the first ten months of that year. This shift reflects a deepening, highly complementary interdependence within the semiconductor supply chain: Taiwan relies on South Korea’s advanced memory products, while South Korea depends on Taiwan’s leadership in advanced fabrication and packaging—forming a new division of labor for the AI era.
The article further analyzes how Taiwan and South Korea anchor critical nodes in the semiconductor ecosystem. Taiwan maintains more than 90% global market share in advanced semiconductor manufacturing, while Samsung and SK Hynix together control over 90% of the high-bandwidth memory (HBM) market. According to Taiwan’s Ministry of Finance, Taiwan exported USD 13.4 billion in ICs to South Korea in 2024 (8% of Taiwan’s total IC exports), while importing USD 43.9 billion in return.
Given the rapid growth of AI server demand, the authors identify substantial opportunities for deeper cooperation, particularly in heterogeneous integration and 3D advanced packaging. While structural competition remains in certain segments, DSET emphasizes that constructive competition fosters innovation—and that the two economies’ complementarities far outweigh their competitive tensions within the broader strategic landscape of the AI supply chain.
At the same time, the commentary cautions that both economies face rising geopolitical and market pressures stemming from technology competition and China’s state-driven expansion. China’s subsidized mature-node and memory production has distorted global pricing and contributed to risks of overcapacity. DSET’s Great Siege report highlights how Beijing leverages a “pseudo-IDM” model—combining subsidies, incentives, and multiple state-backed champions—to increase market share while squeezing Taiwan and South Korea in lower-end segments.
Amid the global trend toward supply-chain regionalization, the authors argue that while both Taiwan and South Korea encounter relocation pressures, preserving advanced capabilities at home and strengthening bilateral cooperation carries greater strategic value. Deepened coordination and technological linkages would not only enhance global supply-chain resilience but also help Taiwan and South Korea secure a more influential role in the emerging order of global tech competition.
