South Korea's Global Semiconductor Market Share at 19%...First Decline in 10 Years

FKI's 10-Year Global Semiconductor Market Analysis Results
Last Year, South Korea's Market Share Decreased by 21% Compared to the Previous Year
Government Support as Percentage of Sales: China 6.6%, US 3%, South Korea Down 1%

Federation of Korean Industries

[Asia Economy Reporter Dongwoo Lee] South Korea's global semiconductor market share recorded its first decline last year in a decade. South Korea has been experiencing a double burden as the gap in market share with the United States widened due to the intensifying US-China hegemony conflict, and the threat from China, backed by massive government support, accelerated.

The Federation of Korean Industries (FKI) announced on the 15th that an analysis of global semiconductor market indicators over the past decade (2010?2019) from IHS Markit, the Semiconductor Industry Association (SIA), and others showed South Korea's semiconductor market share dropped about 21% from the previous year to 19% last year. This marks the first decline in South Korea's semiconductor market share in the past ten years.

During the same period, the United States maintained a global semiconductor market share of over 45%. China showed the highest growth rate, increasing from less than 2% in 2010 to 5% last year. Meanwhile, Europe and Taiwan's market shares stagnated for nine years, and Japan's share fell from 20% in 2011 to 10% last year. The average global semiconductor market shares over the decade were: United States (49%), South Korea (18%), Japan (13%), Europe (9%), Taiwan (6%), and China (less than 4%).

The number of accepted papers published annually by the International Solid-State Circuits Conference (ISSCC) also showed the United States maintaining overwhelming dominance, followed by the four Northeast Asian countries (South Korea, Japan, Taiwan, and China). Notably, China's number of papers surged more than fivefold from 4 in 2011 to 23 this year. The technology gap in the system semiconductor sector between China and South Korea was 0.6 years as of 2017, while the gap between South Korea and the United States in the system sector remained stagnant at 1.9 years in 2013 and 1.8 years in 2017.

The FKI analyzed that China's rapid rise in the global semiconductor market is the result of massive central government support, including the 'Semiconductor Rise' plan. According to data received from the Organisation for Economic Co-operation and Development (OECD), among the top five global semiconductor companies with the highest ratio of government support to sales from 2014 to 2018, three were Chinese companies. The government support-to-sales ratios for Chinese companies were SMIC (6.6%), Hua Hong (5%), and Tsinghua Unigroup (4%). In Europe, companies such as Switzerland's ST and the Netherlands' NXP showed high government support ratios.

Federation of Korean Industries

The FKI also noted that the United States provides substantial support to major semiconductor companies in the form of tax benefits and research and development (R&D). The government support-to-sales ratios for US semiconductor companies were Micron (3.8%), Qualcomm (3.0%), and Intel (2.2%), all higher than those of major domestic companies such as Samsung Electronics (0.8%) and SK Hynix (0.6%).

Chinese semiconductor companies, backed by government support, have aggressively pursued overseas mergers and acquisitions (M&A) since 2015, entering the global market within a short period. According to the OECD, China increased its cumulative number of acquired companies from 4 in 2014 to 29 between 2015 and 2018. This surge contributed to the global semiconductor M&A market's total transaction value soaring from $10 billion (12 trillion KRW) during 2012?2014 to $59.6 billion (72 trillion KRW) in 2016.

The OECD pointed out that the active M&A by Chinese companies was largely due to the contribution of China's 'National Integrated Circuit Industry Investment Fund' established in 2014. For example, when China's packaging and testing (OSAT) company JCET Group acquired Singapore's STATS-ChipPAC in 2015, this fund played a partial role. After the acquisition, JCET grew into one of the world's top three OSAT companies.

In response to China's 170 trillion KRW support for semiconductor advancement, the United States is preparing the 'Endless Frontier Act,' a bill to expand spending by more than $100 billion (120 trillion KRW) in Congress to attract TSMC factories and foster advanced industries.

Kim Bong-man, head of international cooperation at the FKI, said, "Until now, semiconductors, our top export product, have largely succeeded due to the efforts of companies alone," adding, "To maintain our position in the global market, our government also needs to establish policy support such as R&D and tax benefits."

This content was produced with the assistance of AI translation services.