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Semiconductor industry in South Korea - statistics and facts

The manufacturing of semiconductors was one of South Korea’s major economic industries. Initially introduced by the foreign direct investment of U.S. companies in the mid-1960s, South Korea was able to leverage its cheap workforce for the labor-intensive process of manufacturing semiconductors. Domestic companies began investing in their own semiconductor production in the 1980s. Since then, Samsung Electronics and SK Hynix survived through the years and have placed themselves among the leading semiconductor manufacturers worldwide.

Design and/or manufacturing

Semiconductor companies can be largely categorized into three different types: Integrated Device Manufacturers (IDM), fabless, and foundry companies. IDMs are companies that are responsible for all semiconductor manufacturing processes from design to production. Fabless companies produce their own designs for semiconductors but do not own any production facilities. The actual production, or fabrication of semiconductors is outsourced to foundry companies, which in turn focus on the manufacturing process rather than strategic processes like design. Both Samsung Electronics and SK Hynix are IDMs, while DB HiTek is a notable South Korean foundry company.

Harder, better, faster, stronger

The South Korean semiconductor industry’s main advantage lies in the production of memory semiconductors. The sales of NAND flash memory chips showed how competitive Samsung and SK were on a global scale, and both companies also operated in the production of other types of memory semiconductors, boasting a strong presence in the DRAM market as well. However, system semiconductors remained an area for improvement, indicated by the stable Producer Price Index (PPI) of such chips, which is in contrast to the continued decrease in PPI for memory semiconductors.

Pedal to the metal

Semiconductors were used for many modern applications, and the COVID-19 pandemic accelerated the demand for products that required them due to a paradigm shift towards remote work and minimizing face-to-face contact among workers. In these circumstances, South Korea expected a ‘super-cycle’ for its semiconductor industry, in which demand was predicted to boom and bring positive business to involved companies in the near future. Nevertheless, Korean companies face stiff competition from more than capable competitors from the U.S. and China. The continued investments made by China and the pursuit of U.S. companies will pose quite the challenge for South Korean semiconductor manufacturers moving forward.

Interesting statistics

In the following 5 chapters, you will quickly find the 25 most important statistics relating to "Semiconductor industry in South Korea".

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