South Korean chip exports increasingly flow to Taiwan for TSMC packaging amid rising AI demand

The increasing flow of South Korean semiconductor exports to Taiwan reflects a significant realignment in the global AI chip supply chain. High Bandwidth Memory (HBM), a core component for AI computing power, is being integrated into TSMC's advanced packaging processes, highlighting a deepening synergy between Korean manufacturing and Taiwanese packaging capabilities. Technologically, this trend reinforces TSMC’s dominance in advanced packaging while squeezing local Korean packaging firms. From a compliance standpoint, this shift may prompt stricter U.S. export controls on South Korean chip technologies, especially in AI-related transfers. In market terms, TSMC could leverage this to strengthen its bargaining power in AI packaging, while Korean firms face growing risks of technological dependency. Over the next 12–24 months, sustained AI demand will likely deepen the technological collaboration between Taiwan, China and South Korea, potentially forming a new regional tech ecosystem that challenges the traditional Western-dominated supply chain.