Korean chip share dips amid heated chip war while incentive bill gathers dust

2022.11.30 12:26:02 | 2022.11.30 13:59:18

[Photo by MK DB]이미지 확대

[Photo by MK DB]

South Korea’s prized chip prowess has been challenged all around, with the U.S. and Japan determined to rebuild their past glory with the help of Taiwanese foundries and China under government patronage galloping to achieve self-sufficiency.

According to recent data released by global technology industry tracker Omdia, Korea’s chip share in the global market is projected to fall to 17.7 percent this year from 19.7 percent last year.

Memory giant Samsung Electronics Co. was outpaced by foundry leader Taiwan Semiconductor Manufacturing Company (TSMC) in global revenue in the third quarter ended September.

The Taiwanese pure play foundry’s revenue jumped to 27.1 trillion won ($20.5 billion) in the third quarter from 22.9 trillion won in the second quarter while Intel of the U.S.’s rose from 19.3 trillion won to 20.54 trillion won.

Chip revenue of Samsung Electronics fell to 23.02 trillion won from 28.5 trillion won during the same period due to plunge in mass-market chip prices.

The chip war has gained heat in line with post-pandemic realignment in global value chain.

The U.S. is expediting massive investments under CHIPS and Science Act, subsidizing local chipmakers as well as foreign leaders like Samsung and TSMC to strengthen chip supply chain on U.S. turf.

Under the Act, Washington plans to spend $52.7 billion over the next five years in chip industry.

Japan, nostalgic for its past dominance when it accounted for more than half of global chip shipments, has packaged 1.3 trillion yen chip-related budget in its 2022 second extra budget plan. The spending will go to support advanced chip production base, secure chip component and materials, and forge ties with the U.S. in chip research and development.

Eight Japanese companies including Toyota, NTT, and Sony set up a next-generation chip company called Rapidus early this month. The company - funded by government and financial institutions - aims to develop next-generation chip production technology used in super computers and artificial intelligence.

The Japanese government is shouldering half of the costs for TSMC’s chip research center near Tokyo.

China has upped localization campaign since U.S. barriers amid technology war.

Under five-year plan (2021~2025) announced last year, China included chips as one of 7 key technologies for growth. It aims to raise chip self-sufficiency to 70 percent by 2025.

TrendForce logo이미지 확대

TrendForce logo

According to Taiwanese market research firm TrendForce, 19 out of 20 world’s fastest-growing semiconductor companies in the last year came from China, which is up 11 from the previous year.

Competition is even fiercer in system chip sector.

China is home to 2,810 fabless companies, which is 23 times more than 120 in Korea.

China is also expanding presence in foundry.

According to TrendForce, Chinese firms accounted for 10.2 percent in global foundry market in the first quarter of this year, rising to double digits for the first time. Chinese fabless companies that are responsible for budget chip production delivered record earnings last year.

Taiwan also included chip advanced processing development and next-generation chip technology research development in its top 6 major strategy industry plan announced last year. It also said recently that it will establish a chip industry development strategy that includes providing tax incentives, easing regulations, and improve infrastructure.

Korean chipmakers however are alone in the global fight as politicians have not even begun reviewing the Korean version of CHIP Act as the majority opposition considers chip incentives favoritism for big companies.

By Choi Seung-jin, Oh Chan-jong, and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]