While Korean companies have been faltering under unfavorable circumstances at home and abroad, their global competitors are enhancing their competitiveness through acquisitions and partnerships. In particular, Chinese semiconductor companies are increasing their investment in non-memory semiconductors, which Samsung Electronics has chosen as one of its future business items.
On July 24, U.S. semiconductor design software company Silvaco decided to join forces with China’s Silicon Power Technology. Located in Chengdu, China, Silicon Power Technology is a software company that supports semiconductor start-ups in China. While the U.S. government is limiting exports of semiconductor equipment to China, Chinese companies are in the process of reorganizing their industries through technical alliances and mergers and acquisitions.
Samsung Electronics has spent a mere US$160 million in acquiring new companies in the last one and a half years period. It is the amount that Samsung paid when it bought Corephotonics in Israel in January. In the same period, Alphabet, Google's parent company spent US$5.04 billion (including equity investments) in five M&A deals and Amazon US$3.76 billion in seven M&A deals. However, Samsung Electronics' cash and cash equivalents amounting to 102 trillion won, as of the end of the first quarter of this year, is kept in a safe.
Global companies are speeding up business restructurings in preparation for the Fourth Industrial Revolution, but Samsung’s hands are tied due to an investigation into accounting fraud allegations against Samsung BioLogics. The Japanese government's export restrictions have made matters worse for Samsung. Japanese photoresists, which are subject to Tokyo’s export curbs, are vital to the extreme ultraviolet (EUV) process used for producing next-generation semiconductors. Samsung Electronics is planning to apply the EUV process which is currently used in some foundry processes only, to DRAM production, its flagship product.
"One of the biggest problems in the Korean semiconductor industry is the fact that the development of next-generation products can be hampered by difficulties in securing materials," a industry analyst said. "Korea has barely widened its gap with China to one to two years in this sector, but I am concerned that the Korean semiconductor industry will be left behind in competition in the future.”