Is the Once Weakened Rise of Chinese Semiconductors Threatening Korea in 2 Years?

[Asia Economy Reporter Jeong Hyunjin] It is forecasted that China's semiconductor sales will grow rapidly in the global semiconductor market, reaching a level that threatens South Korea by 2024. This outlook overturns previous analyses suggesting that China's aggressive 'semiconductor rise' momentum has stalled.

On the 16th, the U.S. Semiconductor Industry Association (SIA) stated in an article titled "China's share in the global semiconductor market has surpassed Taiwan and is approaching Europe and Japan," published on the 10th (local time), that China's share of the global semiconductor market is expected to increase from 9% in 2020 to 17% in 2024. Assuming China's semiconductor sales grow at an average annual rate of 30% over the next three years, the Chinese semiconductor industry is expected to expand significantly to an annual revenue of $116 billion (approximately 138 trillion KRW) by 2024. If the annual growth rate is assumed to be 20%, the market share in 2024 is expected to be around 11%.

The issue is that South Korea's semiconductor industry market share is expected to remain largely unchanged over the next three years, causing the gap with the rapidly growing Chinese market to narrow quickly. During the same period, SIA forecasts that South Korea's share will hold steady at around 20%. As a result, the market share gap between South Korea and China, which was about 10 percentage points in 2020, will shrink significantly to around 3 percentage points by 2024.

Accordingly, concerns about China's semiconductor rise are increasing again in South Korea. In the midst of significant changes in the semiconductor industry, industry voices emphasize that large-scale investments and support must be actively made not only for domestic semiconductor manufacturers but also for national support, infrastructure development, and research and development (R&D).

This sense of crisis is also growing in the United States. The U.S., the industry leader, accounted for more than 50% of global semiconductor sales until 2015 but has since been in decline, with its share expected to fall below 40% by 2024.

SIA pointed out, "China is building its semiconductor manufacturing supply chain through 28 additional factory construction projects totaling $26 billion," noting that major Chinese semiconductor companies are strengthening cooperation with local governments, and startups manufacturing wafers, the raw material for semiconductors, are receiving government incentive support. It added, "China's semiconductor market share, which was only 3.8% five years ago, is rapidly increasing due to heightened U.S.-China tensions and national-level efforts such as massive subsidies and procurement preferences from the Chinese government," expressing concern.

This analysis differs from the report by the Wall Street Journal (WSJ) on the same day, which stated that at least six large-scale semiconductor projects in China have failed over the past three years. WSJ cited semiconductor foundry companies Wuhan Hongxin Semiconductor Manufacturing (HSMC) and Quanxin Integrated Circuit (QXIC) as representative cases symbolizing China's semiconductor development failures, noting, "The Chinese government provided at least $2.3 billion in support for these projects. Some companies did not produce a single semiconductor."

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