Korean Semiconductor Companies Less Efficient than Global Average

The Korea Economic Research Institute (KERI) said in its report on Jan. 19 that South Korean semiconductor companies’ efficiency was 65 percent in 2022, when the global average was 67 percent.

The World Semiconductor Trade Statistics recently estimated the 2022 sales of the global semiconductor market at US$580.1 billion, up 4.4 percent from a year ago, and the 2023 sales at US$556.6 billion, down 4.1 percent. When it comes to the memory chip market, its 2022 sales estimate is US$134.4 billion, down 12.6 percent year on year, and its growth estimate for this year is negative 17 percent.

According to the research institute, the average efficiency of the top 100 companies in the global semiconductor industry exceeded 70 percent in 2018 to 2021 and fell to 67 percent in 2022. “That year, Taiwanese and Japanese semiconductor companies recorded 75 percent with U.S. at 73 percent, South Korean at 65 percent and Chinese at 59 percent,” it said, adding, “The efficiency of the South Korean companies was 87 percent, the highest in the world, in 2018, but fell a lot due to memory chip market shrinkage.”

The institute pointed out that more investment in R&D and production facilities is necessary for the South Korean companies to improve their efficiency. It also said that assistance from the government is still insufficient despite the recent corporate tax cut and investment tax deduction.