"Semiconductor Supply Shortage Including Automobiles to Last 2-3 More Years... Support Needed to Maintain Competitiveness"

Semiconductor Market Expected to Grow to $1 Trillion by 2030

[Asia Economy Reporter Yu Je-hoon] A recent shortage in system semiconductors, which has severely impacted the automotive industry, is expected to continue for another 2 to 3 years. Although new technologies and related industries with high semiconductor demand, such as autonomous driving, artificial intelligence (AI), and cloud services, are rapidly growing, global semiconductor companies have only just begun to expand their foundry capacities in earnest.

Rapid Growth Expected in Semiconductor Industry Due to AI and Autonomous Driving Technology Advances

The Korea Industrial Alliance Forum (KIAF) held an online seminar on the morning of the 14th titled "Current Status and Recent Market Conditions of the Semiconductor Industry." Participants at the seminar forecasted that the global semiconductor market will continue to grow due to advancements in 4th Industrial Revolution technologies.

Lee Chang-hwan, Vice Chairman of the Korea Semiconductor Industry Association, who gave the keynote presentation, stated, "The global semiconductor market is projected to grow 17.3% year-on-year to reach $525.5 billion this year, and Korea has maintained the second-largest market share since 2013. With the expansion of AI, autonomous vehicles, and cloud services, the overall semiconductor market is expected to grow to $1 trillion by 2030."

System semiconductors, which include automotive and server/storage semiconductors, are expected to experience high growth with an average annual growth rate of 4.1%. In particular, the automotive sector (14.8%), server/storage (10.0%), and mobile (3.1%) sectors are anticipated to show strong growth.

As a result, the foundry industry is also expected to grow at an average annual rate of 9.7% until 2025. Vice Chairman Lee explained, "For high-performance chips used in AI, 5th generation (5G) mobile communications, and autonomous vehicles, advanced process technology is essential, which will increase the importance of foundries. Currently, only TSMC and Samsung Electronics can produce semiconductors with ultra-fine processes below 7 nanometers (nm; 1 nanometer is one-billionth of a meter), and both companies are competing to mass-produce 3 nm chips by 2022."

Semiconductor Shortage to Continue for 2-3 More Years... Hyundai Motor Also Halts Production One After Another

The problem is that the system semiconductor shortage is likely to become a medium- to long-term issue as the rapid advancement of 4th Industrial Revolution technologies combines with the expansion of the non-face-to-face economy due to the COVID-19 pandemic, intensifying foundry supply shortages. Although global semiconductor companies such as Samsung Electronics, TSMC, Intel, and UMC have recently rushed to expand foundry capacities, bottlenecks are expected to continue until these investments are completed.

Domestic automakers are also struggling to overcome production disruptions caused by semiconductor supply shortages. Hyundai Motor has decided to halt operations at its Asan plant, which produces the Sonata and Grandeur, from the 15th to the 17th. This comes just five days after production was resumed following a suspension on the 9th and 10th due to semiconductor supply issues. The Ulsan Plant 4, which produces popular models such as the Palisade, Staria, Grand Starex, and Porter, has also been closed since the previous day. Production of the Porter will be suspended until the 17th, while other models will halt production until the 15th.

Vice Chairman Lee said, "Major foundries are planning new and expanded facilities targeting 2023-2024, but it is expected to take another 2 to 3 years to resolve the foundry supply shortage."

Semiconductor Hegemony War: "Support Needed to Maintain Competitiveness of Korean Companies"

In the subsequent discussion, there were calls for active responses from Korean companies and the government to the market restructuring triggered by the recent semiconductor hegemony competition between the U.S. and China. Losing competitiveness in the semiconductor market, often called the "rice of industry," would inevitably weaken competitiveness across all industries.

Kim Dong-soon, Director at the Korea Electronics Technology Institute, emphasized, "In terms of system semiconductor technology, Korea is lacking not only in technological competitiveness but also in the number of fabless companies. It is important to foster semiconductor design talent and implement policies that support demand companies and star fabless companies."

Jung Man-ki, Chairman of KIAF, stated, "In semiconductors, proactive research and development (R&D) and facility investment are key to competitiveness. Tax credit rates for R&D-related facility investments by large companies should be raised to 30-40%, the same level as competing countries, and tax support for mergers and acquisitions (M&A) activation should also be expanded." Reporter Yu Je-hoon kalamal@

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