For years, South Korea was a dominant force in the semiconductor industry, particularly in memory chips, where giants like Samsung Electronics and SK Hynix set the global standard. However, a recent report by the Korea Institute of Science & Technology Evaluation and Planning (KISTEP) suggests that China has overtaken South Korea in key semiconductor technologies, marking a significant shift in the global chip race. Despite U.S. restrictions meant to curb China’s progress, the country has managed to advance rapidly in foundational chip technologies, leaving South Korea struggling to keep pace.

Who is Making the Claim?

The findings come from a survey of 39 South Korean semiconductor experts conducted by KISTEP in 2024. Their analysis indicates that China has surpassed South Korea in foundational semiconductor capabilities, even in areas where South Korea had traditionally led, such as memory chips. This report follows earlier assessments from 2022 that still placed South Korea ahead in several sectors, underscoring the rapid progress China has made in just two years.

“Even in the memory market, where Korea had maintained its unrivaled status, Chinese semiconductor companies are increasing their market share,” the report states. It also highlights that China has made significant strides in various chip-making sectors, further proving that it is now a formidable competitor in the global semiconductor race.

Where is South Korea Falling Behind?

South Korea now trails China in several critical semiconductor fields:

• Memory Chips: Once a South Korean stronghold, China now ranks second globally in this technology, behind only the United States. According to KISTEP, South Korea’s high-density resistive memory technology scored 90.9%, while China outperformed with 94.1%.
• AI Semiconductors: China maintains an edge over South Korea, scoring 88.3% compared to South Korea’s 84.1% in the evaluation. This area is crucial as artificial intelligence continues to drive global technological advancements.
• Power Semiconductors: China leads with a score of 79.8%, while South Korea lags behind at 67.5%, indicating a significant gap in a field that plays a crucial role in energy-efficient electronics.
• High-Performance Sensing Technology: China holds an advantage with 83.9% against South Korea’s 81.3%, reinforcing its growing influence in next-generation chip technologies.
• Advanced Chip Packaging: South Korea and China are now evenly matched, with both scoring 74.2%. In 2022, South Korea had ranked ahead of China in this sector, showing how quickly China has caught up.

Why is This Happening?

Several factors contribute to South Korea’s slipping position in the semiconductor race:

• China’s Aggressive Investment: Since 2014, China has designated semiconductors as a national strategic industry, investing heavily to develop its own capabilities and reduce reliance on foreign suppliers. Jeong Eui-jin, a research fellow at KISTEP, stated, “China has pursued aggressive policies and large-scale investments to achieve semiconductor self-sufficiency.”
• Market Expansion Strategy: Chinese companies are producing high volumes of legacy chips, where the technological gap with competitors is smaller, allowing them to gain significant market share. KISTEP reports that China is increasing its volume of legacy chips “with little technology gap,” enabling it to compete effectively with established players like South Korea.
• U.S. Sanctions Backfiring: Despite U.S. restrictions on China’s access to advanced semiconductor technology, China has found ways to innovate and develop alternatives, accelerating its progress instead of slowing it down. The report indicates that U.S. efforts to curb China’s chip ambitions have not had the “intended effect,” as the country continues to move forward in semiconductor development.
• South Korea’s Lack of R&D Investment: Compared to its competitors, South Korea’s public and private investment in semiconductor research and development has been relatively low, hindering its ability to stay ahead in emerging technologies. According to the report, South Korea ranks lowest among major semiconductor nations in foundational capabilities and design technology, which has weakened its ability to innovate beyond memory chips.
• Talent Drain: Experts warn that South Korea is experiencing a loss of key semiconductor professionals, further weakening its competitive edge. “Issues such as the exodus of core talent, AI semiconductor technology, U.S.-China competition, South Korea’s domestic-focused policies, and rapid shifts in the supply chain will continue to impact South Korea’s semiconductor industry,” the report states.

What Are Industry Leaders Saying?

The findings have sparked concerns among South Korean industry leaders and experts. Samsung Semiconductor chief Park Yong-in recently urged employees in the System LSI division to push harder in developing flagship products to maintain their global standing. “We must take collective responsibility in developing flagship products to maintain an edge in the market,” he emphasized, underlining the urgency of South Korea’s situation.

What’s Next for South Korea?

To counter China’s rapid progress, experts suggest that South Korea must:

• Increase government and private-sector R&D investments. Without significant funding in research, South Korea may continue to lag behind as China pushes forward with aggressive investment.
• Strengthen policies to retain and attract semiconductor talent. The country’s workforce in the semiconductor industry is at risk due to better opportunities abroad, making talent retention a crucial priority.
• Diversify its semiconductor industry beyond memory chips, focusing more on system semiconductors and AI-driven technologies. China’s advantage in AI semiconductors suggests that South Korea must broaden its technological scope.
• Build stronger partnerships with global tech leaders to secure cutting-edge chipmaking technology and maintain its position in the global supply chain.

The semiconductor race is evolving rapidly, and South Korea is at risk of losing its competitive edge to China. “Given the second Trump administration, the rise of Japan and China, and South Korea’s inadequate domestic R&D investments, the outlook for South Korea’s semiconductor market is not promising,” Jeong Eui-jin noted. If the country does not take swift and decisive action, it could fall further behind in an industry that is crucial to its economic and technological future. The coming years will be critical in determining whether South Korea can reclaim its position as a leader in the global semiconductor market or if China will continue its ascent to dominance.

ACZ Editor: Keep in mind that China stole most of this technology, much from the U.S. but also likely from South Korea. Turns out that industrial espionage pays off.