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Rugged Roads Ahead for Korea’s Plan to Nurture Fabless Industry
Korean Firms Facing Daunting Challenges
Rugged Roads Ahead for Korea’s Plan to Nurture Fabless Industry
  • By Michael Herh
  • June 24, 2019, 13:08
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Korean fabless companies are facing daunting challenges to expand their presence in the global market.

The Korean fabless market is expected to expand in line with the government's policy to foster system semiconductors.

Korean fabless companies are given an opportunity to grow, but semiconductor industry insiders say that their small share in the world fabless market and lack of professional human resources will give them difficulties in trailing world-class fabless companies including those of the United States.

IC Insights, a global market research firm, recently said that Korean companies accounted for less than 1 percent of the global fabless market last year. U.S. fabless companies including Qualcomm and Broadcom represented 68 percent of the world fabless market.

This stands in stark contrast to Korean companies’ 35 percent share in the integrated device manufacturer (IDM) market. An IDM performs the entire semiconductor production process. Korean companies such as Samsung Electronics and SK Hynix are leading the memory semiconductor industry, but they are not active in the fabless market.

Taiwanese and Chinese companies are chasing U.S. companies in the global fabless market with a 16 percent and 13 percent market share, respectively. As of the end of last year, China had about 1,700 fabless companies, about 11 times as many as the 150 Korean fabless companies.

European companies accounted for 2 percent of the world fabless market, which means that Korea actually ranked lowest in the world fabless market.

Korean fabless companies have a small number of flagship products so their market share is small. Under the circumstances, it is difficult for Korean companies to expand their presence in the fabless market. Moreover, China and Taiwan are putting large-scale investment plans into action at the government levels.

Therefore, industry insiders suggest that Korean companies need to penetrate the fabless market with new system semiconductors needed to realize new technologies and services such as modem chips for 5G smartphones.