"Semiconductor Supply Shortage Era... K-Semiconductor's Strength Only in Production Is a Weakness"

Serious Production Concentration in Semiconductor Manufacturing, Design, Equipment, Materials & Components, and Back-end Processes

[Asia Economy Reporter Park Sun-mi] "Among semiconductor production, design, equipment, materials/components, and post-processing sectors, having strength only in production is a weakness of the Korean semiconductor industry."

Shinhan Investment Corp. analyzed the weakness of the Korean semiconductor industry in its report titled 'The Path Forward for Korean Semiconductors' on the 3rd. While it is true that Korea has strengths in memory semiconductor production centered on Samsung Electronics and SK Hynix, the strong concentration in production reveals weaknesses in other areas such as design, equipment, materials/components, and post-processing. However, there is no strategic partner to complement these weaknesses.

Researchers Choi Do-yeon, Go Young-min, and Namgung Hyun stated, "Korea has strengths in semiconductor production but weaknesses in design, equipment, materials, and post-processing sectors," adding, "The world's top two memory companies, Samsung Electronics and SK Hynix, cause a strong concentration (91%) in production, but the value chain outside of production is significantly weak. Most of the value chain within Korea is also concentrated only on memory."

The clear weakness combined with the lack of strategic partners to compensate for it is an even bigger problem. This contrasts with other countries that are addressing their weaknesses through mutual cooperation.

The United States leads the global semiconductor market by leveraging strengths in design and equipment while attracting foundry fabs such as TSMC and Samsung Electronics through massive government support to address its weakness in production. Japan, which is weak in production, and Taiwan, which has weaknesses in equipment and materials sectors, have also started government-level cooperation to complement each other's weaknesses.

The researchers noted, "Meanwhile, Korea is isolated among the world's four major semiconductor powers," and stated, "Memory has the weakness of being more cyclical compared to non-memory, and relying solely on the individual capabilities of memory production companies as it is now is not a good long-term approach. Non-memory requires securing design capabilities, but there is also a lack of active incentives to attract talent."

They continued, "In the non-memory sector, not only design but also securing post-processing and customer response capabilities are important," and "long-term support such as industry-academia cooperation and incentives for talent acquisition is necessary, and strengthening the equipment, materials, and components value chain is even more urgent."

They also pointed out that the government's K-semiconductor strategy is not a sharp solution. The government announced the K-semiconductor strategy aiming to build the world's best semiconductor supply chain by 2030 and plans to invest more than 510 trillion won by 2030. Regarding this, "it is regrettable that most of the funds are expected to come from investments by companies such as Samsung Electronics and SK Hynix," they explained.

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