Korean Semiconductor Companies Losing Market Share in China

The Federation of Korean Industries said in its report on April 25 that South Korean semiconductor companies’ share in the Chinese market, the largest semiconductor market in the world, has fallen since 2019, when the United States began to restrict semiconductor supply to China.

“China began to increase non-memory chip imports and reduce memory chip imports and, as a result, Taiwanese and Japanese companies’ market shares have risen with memory chips making up the largest portion of the South Korean companies’ products,” it said.

According to the federation, the South Korean companies’ local market share fell from 24.7 percent to 19.2 percent from 2018 to 2021, when that of Taiwanese and Chinese rose from 29.8 percent to 34.2 percent and that of Japanese rose 1.8 percentage points.

On four different occasions between April 2019 and September 2020, the United States restricted the supply of Huawei and SMIC products and services incorporating U.S. technologies. Last year, China increased semiconductor imports by no less than 37.2 percent compared to 2018. Under the circumstances, semiconductor exports from Taiwan and Japan to China increased 57.4 percent and 34.8 percent, respectively. Meanwhile, South Korea’s increment stood at 6.5 percent.

“Huawei stopped buying South Korean memory chips under the restrictions, and this has to do with the market share change,” the federation explained, continuing, “In addition, last year, memory chip prices fell and China’s South Korean memory chip import value fell 13.7 percent compared to 2018.”
 

The federation pointed out that China’s current self-sufficiency in the semiconductor industry stands at 15.8 percent although it aimed to reach 40 percent by 2020 and foreign companies in China still account for most of China’s integrated circuit output.

“From 2018 to 2021, China’s annual sales and output in the semiconductor industry jumped 61 percent and 94 percent, respectively,” it went on to say, adding, “Meanwhile, government subsidies for semiconductor companies are much smaller in South Korea than abroad. Specifically, as of June 2020, the subsidy-to-sales ratios of Samsung Electronics and SK Hynix were as low as 0.8 percent and 0.5 percent, respectively.” According to the federation, the ratio was 6.6 percent in SMIC, 5 percent in Huahong Group, 4 percent in Tsinghua Unigroup, 3.8 percent in Micron Technology, 3 percent in TSMC and Qualcomm and 2.2 percent in Intel.