Monty Racusin
Written by Yan Tao (YT) Bon
The modern “golden triangle” of chipmaking in Asia – Taiwan, South Korea, and Japan – is poised to shape the global technology landscape.
In the 1970s, the term “Golden Triangle” evoked images of the opium trade in Asia. Today is determined Foundations of the global semiconductor supply chain.
The modern Golden Triangle — which stretches across Taiwan, South Korea, and Japan — produces chips for tech giants like Nvidia (NVDA), Amazon (AMZN), and Google (GOOG). While these big names hog the spotlight, we believe a group of lesser-known players are proving indispensable to the evolution of the broader technology sector.
Taiwan It has clearly demonstrated its dominance in semiconductor manufacturing, especially in logic chips. For more than three decades, Al Jazeera has become synonymous with cutting-edge chips used in high-performance computing and artificial intelligence. Today, Taiwan – led by the juggernaut TSMC (TSM) – Responsible for manufacturing more than 60% of the world’s chips and more than 90% of the most advanced ones1Which requires very complex production methods.
South Korea It is more than just a niche player, specializing in memory and storage chips. As the AI revolution increasingly requires advanced systems capable of storing massive amounts of data, South Korea has strengthened its position in the near-value chain. Leading players such as Samsung Electronics (OTCPK:SSNLF) and SK Hynix dominate the DRAM and NAND flash memory markets, which are essential for managing and storing data on devices including computers, smartphones and SD cards. Together, the two companies control more than 60% of the DRAM and NAND markets.2 SK Hynix has now embarked on mass production of next-generation high-bandwidth memory (HBM) chips used in Nvidia’s AI-focused chips.3
Many of these accomplishments would not be possible without it Japan, which has emerged as a pivotal supplier of materials used in semiconductor manufacturing. Japan now has a 50% share of the global market for biomaterials4, including chips, photoresists, CMP slurries, photomasks, and bonding wires. To further revitalize the semiconductor industry in hopes of fostering a local champion, the Japanese government approved up to 590 billion yen ($3.89 billion) in subsidies to local chipmaker Rapidus.5 At the same time, industrial cooperation is intensifying across the region: for example, TSMC has announced plans to build a second factory in Kumamoto, Kyushu, historically known as Japan’s “Silicon Island.”
We believe that the modern Golden Triangle not only plays a critical role in today’s supply chain, but will continue to foster broader technological innovation, thus unlocking potentially attractive investment opportunities across the industry and beyond today’s established giants.
Sources: (1) CNN, March 22, 2024; (2) Deutsche Welle, January 24, 2024; (3) Reuters, March 18, 2024. (4) Investaiwen, February 29, 2024; (5) CNBC, April 2, 2024.
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