Former South Korean representative in Taiwan Lee Eun-ho’s new book: South Korea should learn from the system and openness of Taiwan’s chip industry

Lee Eun-ho, a former South Korean representative in Taiwan who holds a PhD in engineering, emphasized in his new book "Chipnomics" that the most critical factor driving Taiwan's industrial competitiveness is not simply the technology itself, but the efforts to change during the crisis. What South Korea should learn from Taiwan is the institutional structure that can breed companies like TSMC.

In an exclusive interview with the South Korean media "The Asia Business Daily", Lee Yin-ho said that the key to Taiwan, which once lagged behind South Korea and had a deep sense of crisis, was able to rise with TSMC as its core is reform. Even on sensitive issues, Taiwan continues to promote reforms.

He said that Taiwan reorganized its financial industry structure in the 2000s, significantly reduced the inheritance tax burden, and prevented companies and capital from flowing to Hong Kong or Singapore. He added that in South Korea, inheritance and succession are narrowly regarded as issues of "hereditary wealth." In Taiwan, this is an industrial policy orientation that enables small and medium-sized enterprises to prioritize the inheritance of technology, business relationships, and skilled talents.

Regarding TSMC's competitiveness, he emphasized "openness." He said that TSMC founder Zhang Zhongmou established the "pure foundry" principle of not competing with customers and created an open innovation ecosystem so that fabless semiconductors, IP providers, equipment and materials vendors, and packaging companies can grow together with TSMC, rather than bringing these companies under its umbrella. This openness also extends to the board of directors, which has recruited many experts from foreign backgrounds and global industries.

He pointed out, "Both South Korea and Taiwan, large companies dominate the industry direction. The real difference lies in whether they adopt vertical integration or build a horizontal ecosystem that can develop surrounding companies."

He also noticed the differences in entrepreneurial culture between the two countries. He said that in Taiwan, entrepreneurs often share responsibilities with technical, sales, financial and other professionals from the early stages of starting a business, instead of the entrepreneur assuming all responsibilities. The mechanism for successful entrepreneurs to become investors and mentors for future generations of entrepreneurs is also relatively mature.

He also pointed out that how Taiwan can reduce its dependence on China is also worth learning from South Korea. Many Taiwanese businessmen also moved west to China, attracted by cheap labor and a vast market. However, starting in the 2010s, they actively transferred core technologies and high value-added production back to Taiwan.

He pointed out, "In the 2010s, it was easier for companies to withdraw from China and move back to Taiwan, but in the 2020s, the difficulty has increased significantly. The later the supply chain is reorganized, the higher the cost."

He believes that Taiwan should be regarded as a learning partner and a partner for South Korea. South Korea’s strengths lie in high-bandwidth memory (HBM), DRAM and NAND flash memory. Taiwan, with TSMC as its core, has established a robust foundry, fabless semiconductor, advanced packaging and AI server supply chain.

In the AI ​​era, memory has developed into HBM, which must be co-designed with GPU, wafer foundry and packaging. Cooperation between SK Hynix and TSMC is imperative.