South Korea does not want to limit its impact in semiconductors to memory. The South Korean government is preparing a major R&D program to accelerate the commercialization of next-generation power semiconductors, an increasingly important type of chip for artificial intelligence data centers, electric vehicles, energy grids, robotics, defense, and aerospace.
The plan is part of the so-called “Ultra-Innovation Economy Project” and involves public investment of over 500 billion won, approximately $329 million. With private contributions, the total project size could approach 750 billion won, around $494 million. The clear ambition is to build a new industrial lever that could become a kind of “second memory” for the country, referencing Samsung and SK Hynix’s success in DRAM and HBM.
This interest is no coincidence. The expansion of AI data centers is increasing demand for energy, electrical stability, and efficiency at every layer of infrastructure. Power chips do not run language models or train neural networks, but perform equally essential tasks: converting, controlling, and delivering electricity efficiently. In an AI factory—where every megawatt counts—reducing electrical losses can directly impact cost, density, and operational capacity.
From Memory to Power Electronics
South Korea has built much of its technological leadership around memory manufacturing. Samsung Electronics and SK Hynix are key players in DRAM, NAND, and HBM, components that have gained value amid the demand for AI accelerators. However, the South Korean government aims to expand this strength into other strategic segments of the supply chain.
Power semiconductors fit into this logic. They lack the visibility of a GPU or the media volume of HBM memory, but are critical for any system that consumes, transforms, or distributes large amounts of electricity. Their role is to manage energy flow with minimal losses, supporting high voltages, elevated temperatures, and demanding frequencies.
| Key Points of the South Korean Plan | Projected Data |
|---|---|
| Program | Ultra-Innovation Economy Project |
| Priority Area | Next-generation power semiconductors |
| Estimated Public Investment | Over 500 billion won |
| Approximate Equivalent | $329 million |
| Total Scale with Private Contribution | Up to 750 billion won |
| Approximate Total Equivalent | $494 million |
| Main Applications | AI, energy, mobility, defense, robotics, aerospace |
| Highlighted Technologies | SiC and GaN |
Vice Prime Minister and Minister of Economy and Finance, Koo Yun-cheol, discussed this roadmap in an economic meeting held in Seoul. According to South Korean media reports, the government plans to finalize this month the technological roadmap for the commercialization of advanced power semiconductors and to launch large-scale R&D planning involving demand-driven companies.
This last point is particularly relevant. The goal is not to fund disconnected research but to gather materials, devices, modules, and complete system demonstrations. The aim is to shorten the cycle from laboratory research to industrial testing and mass production.
Why AI Data Centers Need Better Power Chips
Artificial intelligence has transformed the energy scale of data centers. Racks with accelerators consume much more electricity than previous server generations, and the pressure extends beyond the main chip. Powering GPUs, CPUs, memory, storage, networking, cooling, electrical conversion, and backup systems all contribute to energy losses that become heat, cost, and reduced usable capacity.
Power semiconductors specifically help reduce those losses and stabilize supply. In an AI data center—where loads can vary intensely and continuously—efficient electricity management is just as crucial as computational capacity. The available energy is becoming one of the main limits for scaling AI infrastructure, increasing the value of components that improve efficiency.
| Sector | Use of Power Semiconductors |
| AI Data Centers | Efficient conversion, electrical stability, and loss reduction |
| Electric Vehicles | Battery efficiency and motor control |
| Power Grids | Managing volatility and supporting renewables |
| Robotics | Precise actuator and motor control |
| Defense and Aerospace | Operation in demanding temperature, voltage, and frequency environments |
| Eco-friendly Ships | Electrification and efficient propulsion system management |
Silicon Carbide (SiC) and Gallium Nitride (GaN) technologies are gaining importance because they outperform traditional silicon semiconductors in high-temperature, high-voltage, and high-frequency environments. In electric vehicles, this can translate into greater efficiency and better performance. In power grids, improved control of renewable energy. In data centers, a more efficient electrical infrastructure for increasingly dense loads.
For this reason, South Korea considers this sector more than just a category of components. Power chips connect the semiconductor industry with energy competitiveness, mobility, defense, and automation. If the country does not develop its own capacity, it could depend on foreign suppliers for critical components across several industries where it already has strategic interests.
An Industrial Race Beyond AI
South Korea’s program is part of a broader strategy to identify new growth engines. The agenda also includes small modular reactors, sensor-based AI, actuators for humanoid robots, and secondary batteries. The message is clear: South Korea is trying to anticipate which components will be critical over the next decade.
In power semiconductors, the Ministry of Trade, Industry, and Energy had already emphasized the need for an integrated, demand-driven R&D program. There have also been discussions about improving the publicly operated factory in Busan, specialized in power semiconductors, and utilizing demonstration infrastructures in Pohang and Naju.
Busan has already been selected this year for projects related to power semiconductors, with additional national funding. The city aims to reinforce its role as an industrial hub for this category, with public support intended to develop a more complete supply chain—from research and prototyping to validation and manufacturing.
This strategy makes geopolitical sense. Semiconductor supply chains have become a priority for governments of the United States, China, Japan, Taiwan, the European Union, and South Korea. Dependency on critical components is now viewed as an industrial, energy, and security risk. Power electronics, though less visible than logic chips, clearly fall into this category.
The Challenge: Competing in a Demanding Market
While the potential is significant, the pathway will not be easy. The power semiconductor market already features strong players, especially in Europe, Japan, the U.S., and China. Companies like Infineon, STMicroelectronics, Wolfspeed, onsemi, Rohm, and Mitsubishi Electric have experience, customers, certified processes, and capabilities in SiC and GaN technologies.
South Korea starts from a formidable manufacturing base in semiconductors, but transferring that capacity to power chips requires materials, processes, packaging, reliability, certifications, and long validation cycles in sectors where components like automotive, power grids, or aerospace demand years of demonstrated safety, durability, and performance.
That may be the key to the new program: involving companies that will ultimately use these chips from the initial development phase. If manufacturers in automotive, batteries, data centers, energy, defense, or robotics participate early, the transition to production could be faster and less uncertain. Connecting real demand with R&D is what makes it possible to avoid the project remaining a laboratory experiment.
The comparison with DRAM should be made carefully. Memory is a large, cyclical market dominated by few manufacturers. Power semiconductors are more fragmented and heavily application-dependent. Still, the concept of a “second memory” reflects South Korea’s political ambition: to find a new segment where it can scale production, build independent supply chains, and export technology to critical industries.
For AI data centers, the message is equally clear. The race for infrastructure will not be solely about GPUs, HBM, or high-speed networks. It will also involve electrical conversion, efficiency, cooling, stable supply, and the capacity to operate megawatts with fewer losses. In that arena, power chips can shift from being secondary components to strategic assets.
South Korea has understood this transition and aims to position itself before the market becomes fully divided. The planned investments do not guarantee leadership but do confirm that the AI value chain is broadening. The next big opportunity may not always be the chip training the model; sometimes, it will be the semiconductor enabling efficient power supply to it.
FAQs
What are power semiconductors?
They are chips designed to convert, control, and distribute electricity efficiently. Used in data centers, electric vehicles, energy grids, robotics, defense, and aerospace.
Why are they important for AI data centers?
Because AI data centers consume vast amounts of electricity and require stability, efficiency, and reduced energy losses. Power semiconductors help improve electrical conversion and management.
How much is South Korea planning to invest?
The South Korean government is preparing to invest over 500 billion won (~$329 million). With private contributions, the project could reach approximately 750 billion won (~$494 million).
What technologies are prominent in this area?
Key technologies include SiC (silicon carbide) and GaN (gallium nitride). Both offer advantages over traditional silicon in high-temperature, high-voltage, and high-frequency applications.
Source: en.sedaily
