Jang Seob Yoon
Research expert covering South Korea
Semiconductor industry in South Korea - statistics and facts
Semiconductors have been described as the rice of the South Korean economy regarding their importance. An integral part of several products that range from automobiles to smartphones, semiconductors are a major contributor to South Korea’s economy. The nation is home to key players in the industry, with Samsung Electronics and SK Hynix being two of the leading semiconductor producers worldwide. Amidst significant demand driven by the emergence of artificial intelligence (AI), the country has strived to solidify its global prominence in chipmaking.
What are the different types of semiconductor manufacturers?
Semiconductor businesses can be largely categorized into three distinct types: Integrated device manufacturers (IDM), fabless, and foundry companies. IDMs are companies that are responsible for all manufacturing processes, encompassing design to production. Fabless companies produce their own designs for semiconductors but do not own any production facilities. The actual production, or fabrication, of semiconductors is outsourced to foundry companies, which in turn focus on the manufacturing process rather than design. Both Samsung Electronics and SK Hynix are IDMs, while DB HiTek is a notable foundry company.What kind of semiconductors are produced in South Korea?
The domestic semiconductor industry’s main advantage lies in the production of memory semiconductors. The sales of NAND flash memory chips indicate the competitiveness of Samsung and SK. These companies also manufacture other types of memory semiconductors, boasting a strong presence in the global DRAM market as well. Recently highlighted for its capacity to support AI and big data processing, High -Bandwidth Memory (HBM) semiconductors have become another product to keep an eye on moving forward.Outlook on South Korea’s semiconductor industry
Initially introduced by the foreign investment of U.S. companies in the mid-1960s, South Korea has successfully developed the necessary expertise for the labor-intensive process of producing semiconductors, making the country a modern manufacturing stronghold. The South Korean government has provided subsidies to chipmakers in hopes of bolstering the domestic industry given its contemporary importance. Nevertheless, external stakeholders such as the United States and China have proven to be strong competitors. It remains to be seen whether South Korean companies will successfully rise to the challenge and enter a semiconductor super cycle.
