Comment by CountSessine
13 years ago
Accounting for 20% of South Korea's GDP and having been involved in a number of bribery and wire tapping controversies with former Prime Ministers and government officials, Samsung is too big to fail and they know it.
They are the Goldman Sachs of the electronics industry. The Korean government and the Korean people will never let Samsung fail. Having such a sturdy safety net means they can take some very bold risks and those have really paid off for them.
Maybe that sort of government guarantee is the only way to compete in a field like semiconductors.
Building a fab and developing semi technologies requires a huge amount of capital, but if a competitor comes up with a better process you lose your lunch. That doesn't mean that in the next generation you won't be out ahead though.
Intel seem to do pretty well without a government to bail them out, but the other players are all deeply intertwined with their governments.
Maybe high tech manufacturing is an industry where it is hard for free market countries to compete, hence its flight from the west. Actually, a lot of technological success on the US is built on the back of its military industrial complex.
Is deep government involvement required for technological development? (Specifically the needs R&D and money, not the many small bets found here). If so, wouldn't it be nice if our engine for funding that wasn't built around war.
Intel has been a phenomenal success story without major government assistance (that I know of, at least). But I guarantee that the government would bail it out if it ever fell on hard times. We seem to be entering a new era of international protectionism, and I suspect that more subsidies, protections, and tariffs are on the way.
Whether government investment or assistance is necessary for deep technological R&D is a really interesting question. A preponderance of our hardware (and many of our software) advances, even in the private sector, were built on the back of major government R&D investment. As you've pointed out, a lot of this has come from the military-industrial complex.
Our major companies (other than Goldman Sachs and its peers) don't receive the same level of protection that the Korean chaebol, or the Japanese Big Four, or the Chinese or even French conglomerates do. But that may change in the near to distant future. It will depend upon our domestic firms' abilities to compete on an international playing field that is increasingly turning toward the chaebol model, and not so much the free-market model.