Top 10 Semiconductor Designs Grow 50%... Korea Reveals Weaknesses (Comprehensive)

Last Year’s Top 10 Chip Design Companies Achieved $127.4 Billion in Revenue
Up 48% from a Year Ago
Dominated by the US and Taiwan

[Asia Economy Reporter Park Sun-mi] While the global top 10 semiconductor design (fabless) companies saw their sales grow by nearly 50% last year, Korean companies that failed to enter the rankings did not fully benefit from the boom. This is seen as a clear reflection of the weakness of the Korean semiconductor industry, which is strong only in memory production.

According to semiconductor market research firm TrendForce on the 25th, the total sales of the global top 10 companies in chip design reached $127.4 billion last year. Sales grew by 48% compared to 2020. Amid a widespread semiconductor shortage and soaring chip prices, companies specializing only in design without owning manufacturing plants also saw their sales rise accordingly.

The benefits were monopolized by the U.S. and Taiwan, which are strong in semiconductor design. Among the top five companies, four are American. Qualcomm, ranked first, recorded chip design sales of $29.333 billion last year, a 51% increase from the previous year. Sales of mobile phone system-on-chip (SoC) and Internet of Things (IoT) chips grew by 51% and 63%, respectively, driving the growth. Nvidia, ranked second, also grew 61% to $24.885 billion, while Broadcom ($21.026 billion, 18%) and AMD ($16.434 billion, 68%), ranked third and fifth respectively, also experienced rapid growth.

Taiwanese companies also showed remarkable progress. MediaTek, ranked fourth, earned $17.619 billion with a growth rate of 61%, and other companies within the top 10 such as Novatek (79%), Realtek (43%), and Himax (74%) also performed impressively.

TrendForce analyzed that this year, the demand for high-spec products such as high-performance computing, ultra-high-speed transmission, servers, automobiles, and industrial applications is increasing worldwide, leading to simultaneous revenue growth and business opportunities for chip design companies. The importance of semiconductor design is growing with the expansion of artificial intelligence (AI) and 5G technologies.

Korean Fabless Companies Losing Their Place

However, most Korean fabless companies are small and medium-sized enterprises currently experiencing stagnant growth. Even fabless startups with innovative capabilities hesitate at the new technology development stage due to high additional investment costs and lack of stable sales channels, resulting in a decrease in the number of related domestic companies from over 200 in 2009 to about 150 last year.

Design companies must collaborate with foundry (semiconductor contract manufacturing) companies that produce products according to orders. Amid the global semiconductor boom, orders from the top 10 fabless companies are concentrated on foundry companies, leaving smaller Korean fabless companies with fewer opportunities. Looking at the global fabless market share, the U.S. leads with 59.3%, followed by Taiwan (21.3%), China (14.6%), and Korea (1.5%), with Korea’s share being significantly low.

This structure is pointed out as a long-term obstacle to the development of the Korean semiconductor industry. Typically, fabless companies design semiconductors and entrust production to foundry companies, then deliver to customers such as IT and automobile manufacturers. However, as countries worldwide are building semiconductor ecosystems connecting design, materials, equipment, and production, Korea, which focuses mainly on production, has become relatively less competitive.

While the Taiwanese semiconductor industry strengthens internal links from design to foundry and post-processing, the U.S. is also expected to see synergy between its strong semiconductor design companies and Intel, which has re-entered the foundry market. The market fears that if U.S. companies dominating the global fabless market reduce the shares of Taiwan’s TSMC and Korea’s Samsung Electronics in favor of Intel, the Korean foundry market could face a crisis.

Concerns are rising that the Korean semiconductor industry may face repercussions from failing to build an ecosystem connecting design, materials, equipment, and production. Choi Do-yeon, a researcher at Shinhan Financial Investment, pointed out, "Korea is the world’s strongest in semiconductors based on memory, but is relatively inferior to Taiwan and the U.S. in the non-memory sector," adding, "Non-memory requires securing design capabilities, but there is also a lack of active incentives to attract talent."

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