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Samsung and SK Hynix Expected to Benefit Big Time from 5G Commercialization
Korea Advised to Invest in Non-memory Sector
Samsung and SK Hynix Expected to Benefit Big Time from 5G Commercialization
  • By Kim Eun-jin
  • April 2, 2019, 10:28
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Samsung Electronics and SK Hynix are expected to benefit from a rise in demand for memory chips stemming from 5G commercialization.

5G telecommunication commercialization could provide a turning point for the Korean semiconductor industry, which has entered a downturn, a Korean research institute said.

The Institute for International Trade (IIT) predicted that Korean chipmakers would greatly benefit from a rise in demand for memory chips stemming from 5G commercialization as they hold a firm grip on the semiconductor market while Chinese chipmakers are still struggling. 

The Korean memory semiconductor industry still enjoys a strong competitive advantage despite a recent downturn in exports, said the IIT, which is affiliated with the Korea International Trade Association (KITA). The Korean semiconductor industry held a 63.7 percent share of the world memory market in 2018.

China, a strong rival for Korea, has been facing an uphill battle due to checks from the United States. Fujian Jinhua, a server DRAM maker, is not active and NAND company YMTC is reportedly having difficulties in mass-producing 32-layer NAND flashes. Thus, experts expect that Samsung Electronics and SK Hynix will enjoy brisk sales when 5G investment gets in full swing.

The problem is the non-memory sector. In the foundry business, Korea rose from 4th place in 2017 to 2nd place in 2018 in terms of market share, but in the fabless (design) field, Korea lagged behind even China. In 2016, the number of fabless companies in Korea totaled 150, about 10 percent of China. SK Hynix is building a foundry plant in Wuxi, China, because there are many fabless companies in China.

This can be a negative point for the Korean semiconductor industry as demand for new chip design can explode due to the rise of artificial intelligence (AI), autonomous driving, and the internet of things (IoT). In particular, this can become more painful to Korean chipmakers as opportunities can arise in sectors that have not been preempted by anyone like the market of APs for automobiles.