Korean System Semiconductors Weak in Chip Design and Back-end Processing... "Market Share from 3% to 10%"

Strategy to Become a Semiconductor Superpower
Raising System Semiconductor Market Share from 3% to 10% by 2030

[Asia Economy Reporter Sunmi Park] The government has set a goal to secure leading technologies in system semiconductors and raise the market share to around 10% by 2030. The plan is to actively foster the system semiconductor industry, which lags behind memory semiconductors in competitiveness, to lead the achievement of a "semiconductor superpower." Since Samsung Electronics, the number one in memory semiconductors, announced a roadmap to become number one in the system semiconductor market by 2030, the government also plans to raise the current 3% market share through active technology and research and development (R&D) support.

On the 21st, Minister Lee Chang-yang of the Ministry of Trade, Industry and Energy announced the "Semiconductor Superpower Achievement Strategy" at Dongjin Semichem's Balan plant located in Hwaseong, Gyeonggi Province, outlining these plans.

The government's target market share for system semiconductors is 10%, with a deadline set for 2030. As of last year, Korea's system semiconductor market share was only 3%. To achieve this, the government plans to focus on developing three next-generation semiconductor technologies: power semiconductors, automotive semiconductors, and artificial intelligence (AI) semiconductors. Preliminary feasibility studies worth 450 billion KRW for power semiconductors and 500 billion KRW for automotive semiconductors will be promoted. For AI semiconductors, 1.25 trillion KRW will be concentrated on R&D support until 2019.

In addition to developing leading technologies, the government will also take the lead in nurturing fabless (semiconductor design) companies. Thirty promising fabless companies with global potential will be selected as "Star Fabless," and comprehensive support will be provided for commercialization and global expansion, including dedicated R&D, design tools, planning, technology, production, and sales channels. A "demand-linked project" will also be promoted to develop system semiconductors in collaboration with global major companies in the future car and energy sectors. Industry-specific alliances of fabless and demand companies will be formed to create a system that enables one-stop collaboration throughout the entire process from product development to testing and commercialization.

Support for the back-end process (packaging and testing) sector will also be expanded. In the second half of this year, an advanced back-end process council composed of experts from industry, academia, and research institutes will be launched to derive an advanced back-end process technology roadmap and mid-to-long-term development directions for the domestic back-end process sector. Through this, a new large-scale R&D preliminary feasibility project specialized in advanced back-end processes will be planned.

Although Korea is number one in memory semiconductors, it is very weak in the system semiconductor field. The market share for system semiconductors has never exceeded 3%. Samsung Electronics ranks second globally in the foundry (semiconductor contract manufacturing) sector, but there is a large gap in market share compared to Taiwan's TSMC, which is number one worldwide. Considering the entire system semiconductor cycle, which consists of fabless, foundry, and back-end processes (assembly), the gap with leading countries is even wider.

In particular, fabless companies are lagging behind due to a shortage of design personnel and difficulties in securing foundry capacity, with only one domestic company, LX Semicon, among the world's top 50 fabless companies. According to IC Insights, the United States, which has world-class fabless companies such as Qualcomm, Nvidia, and AMD, holds an overwhelming 68% share of global sales. Taiwan (21%) and China (9%) follow. Korea's fabless sales account for only 1%, having almost no influence.

Korea has also failed to enter the back-end process market, which is dominated by Taiwan (52%), China (21%), and the United States (15%). However, as awareness grows that significant semiconductor performance improvements can be achieved by supplementing back-end processes, companies like Samsung Electronics and SK Hynix have jumped into complementary work for technology development. Since last month, Samsung Electronics has organized a "Advanced Packaging Commercialization" task force (TF) team under Kyung Kye-hyun, President of the DS Division, to explore ways to utilize advanced packaging technology. SK Hynix has also recognized the importance of next-generation packaging technology and is focusing on securing competitiveness in advanced TSV (Through Silicon Via) technology.

However, experts' outlooks are not very optimistic. A representative from the Korea Semiconductor Industry Association said, "By around 2025, the scale of system semiconductor production capacity by country will be in the order of the United States, Japan, and China." Even if the Korean government and companies support the fostering of system semiconductors, it is expected to be difficult to raise market share as countries with advanced technology are competitively expanding their investments.

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