Jeon Byeong-seo, director of the China Economic and Financial Research Institute, speaks during a lecture at the Global Business Forum hosted by The Korea Herald and Herald Business in Seoul on Wednesday. (The Korea Herald)


South Korea should move beyond binary choices between the United States and China an 야마토게임 d instead pursue a “pro-supply chain” strategy to secure its position in the intensifying semiconductor and artificial intelligence competition, an expert said Wednesday.
Speaking at the Glo 릴게임바다이야기 bal Business Forum hosted by The Korea Herald and Herald Business, Jeon Byeong-seo, director of the China Economic and Financial Research Institute, said the US-China technology rivalry is fundamental 릴게임몰 ly a competition over supply chains — and Korea’s strategy must reflect that reality.
“South Korea’s path is not about being pro-US or pro-China, but about being ‘pro-supply chain,’” Jeon sa 야마토게임장 id. “In the AI era, competitiveness hinges on securing the entire ecosystem.”
He described AI competition as driven by five key elements: “man, chip, money, data center, and electricity with 골드몽릴게임 water.”
“A single exceptional genius can determine a country’s technological edge,” Jeon said, warning that South Korea’s top math and science talent is increasingly shifting toward medical schools. “We need to redirect talent into semiconductor engineering.”
On chips, he stressed that AI development is impossible without advanced manufacturing and memory.
“Without foundries and high bandwidth memory, AI cannot function,” he said. “China is training models using Nvidia’s H800, running inference on Huawei’s 910C and storing data with high bandwidth memory, 2nd generation.” While South Korea holds a technological lead in areas such as 2-nanometer processes, Jeon warned that declining investment could undermine its advantage.
“Semiconductor subsidies should be viewed as defense spending,” he said. “This is not just an industry. It is national security.”
Jeon also highlighted the scale of capital required: “AI is built by burning money. ... China is raising funds through financial markets, while South Korea is seeing its AI companies acquired by foreign firms. We need a national AI fund.”
On infrastructure, he pointed to China’s rapid expansion of data centers, including underwater facilities in Hainan, while noting regulatory and social hurdles in Korea. “In Korea, data centers are often treated as unwanted facilities,” he said. “This needs to be resolved through legislation.”
Energy and water access, he added, are equally critical.
“Data centers must be located where electricity is cheap and abundant,” Jeon said. “China concentrates them in its western regions, and Taiwan prioritizes water supply for semiconductor fabs. In Korea, local conflicts over power and water are delaying projects.”
Turning to strategy, Jeon urged Korea to focus on a single strategy — irreplaceable technologies, "such as HBM bonding and specialized materials.” He also warned against underestimating China’s industrial ecosystem.
“The biggest victim of China’s ecosystem expansion could be Korea’s semiconductor industry and its suppliers,” he said.
To stay competitive, Jeon called for restructuring the materials and components sector.
“We must clearly distinguish what to keep and what to sell,” he said. “Low-value mature products should be divested, while high-value AI and HBM-related sectors must be expanded.”
He added that Korea should prepare for a post-extreme ultraviolet landscape.
“The EUV barrier will not last more than five years,” he said. “We need to focus on non-EUV high-performance processes such as GAA and 3D DRAM.”
Jeon also emphasized the need to monitor China’s technological trajectory, particularly Huawei.
“Huawei is like an aircraft carrier in China’s tech ecosystem,” he said. “We must maintain technological separation while closely tracking non-US standards such as RISC-V.”
On policy, he called for a shift toward a hybrid model combining private-sector dynamism with state-led investment.
“We should not dismiss China’s hybrid state capitalism,” he said. “Korea needs its own model, including converting semiconductor funds into equity investment vehicles.”
He further suggested redefining Korea’s approach to China.
“We should manage China like the Middle East,” he said. “Redefine it as a supplier of raw materials and intermediate goods, while pursuing diversification and strategic stockpiling.”
Jeon stressed that speed is just as important as technology.
“Technological superiority alone is not enough — market preemption is critical,” he said. “We need to build advanced fabs at twice the speed to secure market dominance.”
He also urged the government to treat semiconductors as strategic military assets, adding, "R&D spending should be reclassified as part of the national security budget.”
“The future demand lies in electric vehicles,” he said. “We need to focus on automotive semiconductors and build alliances among Hyundai, Samsung and SK.”
Ultimately, Jeon argued that Korea’s success will depend on building an integrated ecosystem.
“We must develop a full AI semiconductor platform combining memory, AI chips and packaging,” he said. “This is no longer about choosing sides — it is about securing the supply chain.”



Lee Nam-sik, president of JEI University, speaks during a lecture at the Global Business Forum hosted by The Korea Herald and Herald Business in Seoul on Wednesday. (The Korea Herald)


In a separate lecture, Lee Nam-sik, president of JEI University, said the rapid shift toward so-called “physical AI” — where artificial intelligence moves beyond digital environments into real-world applications — is fundamentally reshaping industrial structures and competitive dynamics.
“The winners in the era of physical AI will be those that can bridge the digital and physical worlds, while many traditional sectors, including areas like advertising, will face growing disruption,” Lee said.
“This is not just a technological trend, but a structural shift in the industrial landscape,” he added. “As AI expands, parts of the conventional software industry are likely to shrink or be replaced, making it essential for countries and companies to prepare for a completely new playing field.”
Lee emphasized that the pace of change is accelerating, requiring proactive strategic decisions.
“The landscape is already changing,” he said. “What matters now is how quickly we can redesign our approach and position ourselves for the next phase of the AI-driven economy.”