
ASML doesn’t let just anyone into its cleanroom. The Dutch powerhouse is the linchpin in the $600 billion global semiconductor supply chain, and its ultra-secure cleanroom in Veldhoven shows off the closest modern engineering has come to magic: ASML’s lithography machines etching miniscule transistors onto the chips that power all our lives. A speck of dust or an airborne microbe in the cleanroom could damage one of the $350 million machines.

But in December, Yoon Suk-yeol, the president of South Korea, finagled an invitation and took a tour — the first foreign dignitary to do so. Clad in blue coveralls and with only his eyes visible, Yoon looked a touch goofy in the getup, but you can tell he was smiling underneath the full face mask.
Days later, ASML and Samsung Electronics would sign a $760 million deal to expand the Dutch firm’s presence in South Korea, and just this week Reuters reported that SK Hynix, another Korean chipmaker, is one of the first buyers of ASML’s newest machines. Both deals represent massive victories for Yoon’s extravagant plans to strengthen South Korea’s semiconductor industry.
South Korea is already the world’s dominant producer of memory chips, a type of semiconductor that stores digital data. Today, Samsung and SK Hynix control nearly three quarters of the market for “DRAM” memory chips, with much of the remaining market share held by the U.S.’s Micron. Samsung and SK Hynix also control more than half of the market for NAND flash memory, another kind of memory chip used in mobile phones, USB sticks and hard drives.
But to achieve this standing, South Korea’s chip firms have long depended on and invested in Chinese manufacturing and factories — a linkage that now places them in the crosshairs of the U.S. government’s efforts to “decouple” the semiconductor industry from China. As geopolitics and global supply chains remake the industry, it seems that Korean firms’ days of making chips in China are numbered. President Yoon has described competition in the industry as an “all-out war” for survival, and his visit to Veldhoven illustrates Seoul’s efforts to foster a closer relationship to Western chipmaking partners, including the Netherlands, the U.S. and Japan.

South Korea has no choice, experts say, but to reinvent its approach to the semiconductor industry.
Korean chipmakers “have huge sunk costs in China through their investments in state of the art facilities,” says Yeo Han-koo, a senior fellow at the Peterson Institute for International Economics, a Washington, D.C. think tank, and former South Korean trade minister. “Now they have to navigate in a politically savvy way, not just a commercially efficient way.”

They also face new vulnerabilities as China tries everything it can to fill the void with its own domestic champions. Last June, Korean authorities said they had uncovered one of the most audacious industrial espionage cases in the country’s history. Choi Jin-seok, a former Samsung executive, is accused of stealing valuable trade secrets to help China advance its own chipmaking ambitions and build a factory in Xi’an, China. Officials subsequently revealed that nine others are also under investigation, and that Choi helped recruit and send hundreds of semiconductor experts and engineers to China.
The case, alongside a slew of similar arrests this past year, has forced South Korea to reckon with an uncomfortable reality: China’s chipmakers are spending big to acquire critical knowhow, and South Korea is a prime hunting ground.
“China has a lot of people who know about logic [chips], but the human resource situation for memory [chips] is radically different,” says Douglas Fuller, a semiconductor expert and associate professor at Copenhagen Business School. “When Samsung broke into the industry they brought something like 7,000 engineers back from the U.S. who had worked in the industry. Where is China going to get those engineers?”
To protect its standing, South Korea is going all in on building new chip plants and research centers at home. Last March, Seoul outlined an audacious blueprint to muster $228 billion in private sector investment to build an enormous chipmaking cluster in Korea by 2047. Last month, it raised that figure even further, pledging $470 billion by 2047. Samsung, for its part, is chipping in $375 billion to take on TSMC in the foundry business, which involves making logic chips for other firms.

The cluster would be the world’s largest area dedicated to semiconductor manufacturing, and would plant Korea’s most sophisticated plants firmly at home. Unveiling the plans last March, President Yoon described an “economic battlefield” that started with semiconductors, but had “expanded to all high-tech industries.”
“Every country is building advanced manufacturing,” he added. “We must spare no effort in providing large-scale subsidies and tax support to attract them to our country.”
THE KOREA MODEL
In 2019, when Samsung announced plans to expand its NAND manufacturing base in China, then-Chinese premier Li Keqiang was on hand in Xi’an, saying the record investment showed “China’s door to the outside world will only open wider and wider.”

“We will strictly protect intellectual property rights, and treat Chinese and foreign enterprises of all types of ownership registered in China equally,” he pledged.
Since 2012, Samsung has poured more than $15 billion into the state-of-the-art plant in Xi’an. Although it remains Samsung’s only memory factory overseas, today it accounts for 40 percent of Samsung’s $11 billion NAND business and represents the world’s largest NAND manufacturing base.
SK Hynix has also invested heavily in China. Since 2006, it has spent more than $20 billion to build a DRAM factory in Wuxi — the largest foreign investment project in Jiangsu Province. The plant is so important to the city’s economy that a local school and hospital is named after the company. The Wuxi factory is now responsible for about half of SK Hynix’s DRAM production. In 2021, the company also bought a former Intel facility in the northern city of Dalian for $7 billion.

South Korea’s family-owned conglomerates, known as the “chaebol,” were some of the earliest investors in Chinese manufacturing. After South Korea formally recognized the People’s Republic of China in 1992, the chaebol moved its appliance and mobile phone factories to China to cut costs. Experts say that moving the final assembly process for the chips closer to their customers — manufacturers of PCs, smartphones and servers — was a logical next step.
“At that time, China was the fastest growing player in the electronics supply chain,” says Yeo. “Before it became such a political decision, that was simply the place to be.”
The whole corporate structure [of the chaebol] was almost ideal for entering this business and deferring profits to the future, especially in the early years when you had to have these massive capital investments.
Douglas Fuller, a semiconductor expert and associate professor at Copenhagen Business School
Memory chips were a natural niche for South Korea’s deep-pocketed chaebol to fill. Memory chip manufacturing demands huge upfront investment, but there is little demand for memory chips that are not cutting edge. (With logic chips, by contrast, like those made by Intel and TSMC, a substantial market exists for older ‘legacy chips’.) The result is that the memory chip market operates essentially on a winner-takes-all basis, with those winners needing to be able to weather huge swings in demand while still investing massive amounts into R&D.

“Those features fit the Korean chaebol quite well,” explains Fuller. “They can draw on a ton of patient capital from chaebol affiliates, and obviously a lot of government help too. The whole corporate structure [of the chaebol] was almost ideal for entering this business and deferring profits to the future, especially in the early years when you had to have these massive capital investments.”
Unfortunately for the chaebol, however, these features also fit well with the Chinese government’s industrial strategy. Although there is no direct equivalent of the chaebol in China, domestic producers have been flooded with state funding; a 2021 White House report cited one estimate that Yangtze Memory Technologies Co. (YMTC) had received $24 billion in subsidies for just one factory in Wuhan. In 2023, Beijing invested $1.8 and $2 billion into YMTC and ChangXin Memory Technologies (CXMT) respectively to support their efforts to catch up with Samsung and SK Hynix.
The strategy appears to be working: In 2022, YMTC came close to securing a deal to supply NAND chips for Apple’s iPhones, drawing protests from lawmakers in Washington. In a statement to The New York Times, Senator Marco Rubio warned: “If Tim Cook understands the risks that YMTC and the rest of the Chinese Communist Party’s chip-making efforts pose to U.S. national security and that of our allies, then he and his company should clearly commit not to proceed.”
Apple ultimately called off the YMTC deal, soon after the Commerce Department released its now infamous chip export controls in October of 2022. By restricting the sale of advanced chip making equipment to companies in China, the export controls were designed to stop Chinese chip makers in their tracks. Washington went a step further with YMTC in December of that year by adding it to the Entity List, which prohibits U.S. companies from engaging in certain trade activities with it.

The move, says Gregory Allen, director of a center for AI and advanced technologies at the Center for Strategic and International Studies, a Washington think tank, signaled the White House’s alarm at YMTC’s efforts to achieve supply chain self-sufficiency.
“YMTC began an incredibly intense de-Americanization initiative years before they were put on the Entity List,” he says. “It is engaged in a pretty all out effort to upgrade the equipment supplier ecosystem.”
Although Washington’s steps to hinder YMTC provided Korean chipmakers with some reprieve, the October 2022 export controls also set off alarm bells. The export restrictions, after all, apply even to foreign chipmakers in China, which would have made Samsung and SK Hynix collateral damage.
“The South Koreans were really panicked — it was going to completely ruin their operation,” says Cole McFaul, a research analyst at the Center for Security and Emerging Technology (CSET), a Washington, D.C., think tank, adding that there was also a sense of betrayal. “SK Hynix took Intel’s facility in China off its hands [in 2021]. But when the chip making rules came out, the feeling by Korean chipmakers was: ‘That’s the repayment we get for that?’”

Commerce officials eventually granted the Korean firms a one-year exemption from the new controls before extending the exemption indefinitely last year. But that is hardly a long term solution.
“Getting an exemption so [Korean firms] weren’t shut down was not a win, it was a ‘we’re not going to screw you over’ [from Washington],” says Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics. Korean firms remain at a disadvantage, he adds, given the complex challenge of relocating their multi-billion-dollar operations away from China — a cost a rival like Micron doesn’t have to contend with.
Indeed, Korean firms have more to fear than just sunk costs.
COPY, PASTE
Before he took his talents to China, Choi Jin-seok enjoyed a decorated career in South Korea. Having won plaudits for his breakthroughs at Samsung and his leadership at SK Hynix, the now 65-year-old engineer was seen as a star of South Korea’s memory sector.
Choi began his career at Samsung in 1984, the same year that the conglomerate opened its first DRAM factory. He rose through the ranks to become vice president of the company’s process technology department until 2001, when he left to become chief technology officer at Hynix Semiconductor (now SK Hynix).

There, Choi helped to turn around Hynix’s struggling finances by improving the efficiency of its chip production process. His contributions earned him a prestigious Order of Industrial Service Merit award from the government in 2009, and put Choi in the running to eventually lead SK Hynix. But corporate politics prevailed: Choi lost out on the top job and left the firm in 2010.
After drifting between several executive positions, including a brief stint at a solar panel manufacturer, Choi eventually landed in talks with Taiwan’s Foxconn about setting up a memory chip factory in Xi’an — the same Chinese city where Samsung’s memory chip plant is located. In a 2018 interview with China’s Science and Technology Daily, Choi described the pace of development of China’s chip sector as “obviously faster” than South Korea’s. He also emphasized that China didn’t lack funds or equipment, it was simply behind on technology.
But according to Korean prosecutors, Choi was willing to help China catch up. They allege he illegally obtained factory blueprints of Samsung’s China plant, including the plant’s floor layout and semiconductor cleanroom, as well as other engineering secrets from two contractors who had worked on the Xi’an facility.
“This is not a simple semiconductor tech leak but an attempt to copy a whole chip plant,” Korean prosecutors said in a statement. “The scope of the crime and damage are incomparable to previous individual tech leak cases.” The plant was never built after Foxconn pulled out of the project, according to reporting by Reuters, citing Choi’s lawyer.

Chinese media reports and company records from the data analytics platform WireScreen show that Choi had also partnered up with the municipal government of Chengdu to help revive an abandoned fab in the city. The $100 million facility started in 2017 as a joint venture between Chengdu’s government and California-headquartered GlobalFoundries. But GlobalFoundries pulled back from the project just a year later, and the entire plant was shut down in 2020.
That year, Choi and the Chengdu government established a new joint venture called CHJS High Technologies to take over the former GlobalFoundries facility. While Choi has not been charged in relation to his work on the Chengdu project, Korean prosecutors revealed last month they are investigating another ex-Samsung researcher for allegedly leaking 700 DRAM designs to CHJS.
Choi has publicly pushed back against the allegations that he sought to replicate Samsung’s technology in China. In a handwritten letter to Reuters in June, he explained that Foxconn’s planned factory in Xi’an was for DRAM, which requires different technology from manufacturing the NAND flash memory chips that Samsung produces in the city.

Foxconn and Samsung did not respond to requests for comment. In a statement to the Financial Times last year, Foxconn said the company “abide[s] by laws and regulations governing jurisdictions that we operate in.”
The case has forced South Korea into a reckoning over how it treats economic espionage. For a long time, says Ben Forney, a doctoral researcher at Seoul National University, “industrial espionage was seen as just a part of doing business” in South Korea.
In the early 2010s, for example, Samsung hired Liang Mong-song, a former senior director of R&D at Taiwan’s TSMC, as chief technology officer — a move that some experts point to as the source of Samsung’s huge advances in logic chips in the early 2010s. Liang had spent close to two decades at TSMC, before quitting the company after he was reportedly passed up for a promotion.

Taiwan’s Supreme Court concluded in 2015 that Liang had leaked trade secrets to Samsung and prohibited him from working there until the end of the year. (Liang made another controversial move two years later, when he joined China’s Semiconductor Manufacturing International Corporation (SMIC), where he remains co-CEO.)
But while Taiwan guards its semiconductor industry closely, penalties for economic espionage in South Korea are relatively weak: just 47 people in 445 economic espionage cases between 2019 and 2022 have received jail terms, according to Korean prosecutors.
“Even a few years ago, I don’t think Korean companies or the government paid much attention to the protection of technologies,” says Yeo. “South Korea was busy catching up to the newest technologies. It was always looking forward, not backward.”
According to Forney, who publishes a newsletter about industrial espionage cases, for many Korean engineers, “it’s not seen as a national security issue or being a traitor to your country to join a Chinese company.” With some Chinese companies offering salaries multiple times higher than what engineers can earn in South Korea, he says, “so many people in high-tech companies see this as a business opportunity.”
In the wake of the Choi case, however, several other high profile cases have compounded the sense that South Korea’s semiconductor industry is at risk. Last month, for instance, prosecutors indicted a former Samsung employee for allegedly passing trade secrets valued at $1.8 billion to China’s CXMT, including technical details related to Samsung’s most cutting edge DRAM chips.
South Korea is currently considering raising the penalty for leaking key national technologies overseas, and President Yoon is working with Washington to deepen their security alliance. In August, the two countries agreed to form a ‘Disruptive Technology Protection Network’ with Japan, that would allow the countries to coordinate defenses against China’s theft of critical technologies. Kevin Kurland, a top official at the Commerce Department overseeing export enforcement, described the initiative in Congressional testimony last month as a way to “enable joint investigative approaches and complementary enforcement outcomes.”
Within the heightening strategic competition between the U.S. and China, South Korea has now emerged as one of the most important middle powers.
Cole McFaul, a research analyst at the Center for Security and Emerging Technology (CSET)
For South Korea, however, addressing the problem directly with China is something of a non-starter.
“The Koreans don’t ever bring this up in bilateral discussions with the Chinese. They don’t want to make this a geopolitical issue,” Forney says. “Even Yoon, who is very pro-American, doesn’t want to be seen as antagonistic to China. What the Korean government fears most is not economic espionage but economic coercion.”
A CGTN video from February 2016 on South Korea’s deployment of the THAAD system. Credit: CGTN
For example, Beijing has already targeted Micron, Samsung and SK Hynix’s primary competitor in memory, for retaliatory action last year, in response to Washington’s export controls. Many Korean firms also still have scar tissue from 2016, when Beijing led a wide-ranging boycott of Korean goods in response to Seoul’s deployment of the Terminal High-Altitude Air Defense system, or THAAD.
There is also the sense that rocking the boat simply isn’t worth it. As YMTC and CXMT grow and Korean firms embrace a strategy of “de-risking,” a quiet shift is already underway: In 2018, China accounted for some 71 percent of South Korea’s chip exports; that figure fell to 59 percent in 2022.
“With YMTC on the entity list, it will be difficult for it to push for massive growth until they’ve conquered the manufacturing equipment bottleneck,” says Avril Wu, senior research vice president at TrendForce, a Taipei-based tech market research institute. “But the market consensus is they’ll achieve that goal in the next 3–5 years.” (Experts predict that CXMT’s catch-up may take longer, given its focus on DRAM production, which requires ASML’s heavily export controlled EUV lithography machines.)

With Korean firms living on borrowed time in China, South Korea’s deals with Western countries — “chip alliances,” as President Yoon has called them — represent a longer-term strategy away from memory chips. Some analysts note the ASML deal shows South Korea doubling down on manufacturing logic chips, for which demand is skyrocketing amid the AI boom. Samsung and SK Hynix have also reportedly met with OpenAI’s Sam Altman to discuss plans for AI chip fabs meant to compete with Nvidia.
It’s a significant change in the industry — and one that underscores how the U.S.-China competition has forced countries to put all their chips out on the table.
“Since the 1990s, memory chips have been the bread-and-butter of [Korean] chip making companies, fueling a lot of the country’s growth,” says McFaul from the Center for Security and Emerging Technology. “Within the heightening strategic competition between the U.S. and China, South Korea has now emerged as one of the most important middle powers.”

Eliot Chen is a Toronto-based staff writer at The Wire. Previously, he was a researcher at the Center for Strategic and International Studies’ Human Rights Initiative and MacroPolo. @eliotcxchen