The Financial Times' warning: Chinese chipmakers threaten Korean dominance
Published: 13 Feb. 2025, 00:00
The Financial Times (FT) has raised concerns that Korea's semiconductor industry, which has long dominated the global market, may soon be overtaken by China, similar to how Korea displaced Japan in the 1980s and 1990s.
Korea is currently the leader in the memory semiconductor sector, having surpassed Japan to claim the global top spot. The country built its market share through aggressive pricing and mass production, while maintaining a significant technological edge. This helped propel Korea's economy, particularly exports. However, the semiconductor industry now faces growing challenges.
The FT reports that Chinese semiconductor companies are rapidly expanding and gaining market share. China’s largest memory semiconductor company, Changxin Memory Technologies (CXMT), increased its market share from 5 percent last year to an estimated 12 percent this year. This surge in low-cost Chinese DRAM products is putting pressure on Korean firms.
The situation is further complicated by advancements in China’s semiconductor self-sufficiency efforts, including the success of deep-learning AI technologies. These efforts are narrowing the technological gap in high bandwidth memory (HBM) and other cutting-edge memory products. The FT warns that Korean companies, caught between U.S. Micron in the high-end market and CXMT in the low-end market, face a "nutcracker" situation in both technology and price competition.
Despite the looming crisis, Korea’s response appears inadequate. There is a leadership vacuum, and the government has yet to develop a comprehensive strategy to address potential U.S. tariffs on semiconductors. While the "K-Chips Law," which provides tax breaks for semiconductor investments, has passed, critical measures like the semiconductor special law, including the sought-after exemption from the 52-hour workweek, remain delayed due to political infighting.
In a competitive global market, Korean companies must invest more in technology development to maintain their competitive edge. The government must prioritize policies that create an environment where domestic firms can compete effectively. Failure to act swiftly may see Korea following the path of Japan’s semiconductor industry, which, after losing its dominance for four decades, is now trying to revive itself. The window to turn this crisis into an opportunity is rapidly closing.
Translated using generative AI and edited by Korea JoongAng Daily staff.
Korea is currently the leader in the memory semiconductor sector, having surpassed Japan to claim the global top spot. The country built its market share through aggressive pricing and mass production, while maintaining a significant technological edge. This helped propel Korea's economy, particularly exports. However, the semiconductor industry now faces growing challenges.
The FT reports that Chinese semiconductor companies are rapidly expanding and gaining market share. China’s largest memory semiconductor company, Changxin Memory Technologies (CXMT), increased its market share from 5 percent last year to an estimated 12 percent this year. This surge in low-cost Chinese DRAM products is putting pressure on Korean firms.
The situation is further complicated by advancements in China’s semiconductor self-sufficiency efforts, including the success of deep-learning AI technologies. These efforts are narrowing the technological gap in high bandwidth memory (HBM) and other cutting-edge memory products. The FT warns that Korean companies, caught between U.S. Micron in the high-end market and CXMT in the low-end market, face a "nutcracker" situation in both technology and price competition.
Despite the looming crisis, Korea’s response appears inadequate. There is a leadership vacuum, and the government has yet to develop a comprehensive strategy to address potential U.S. tariffs on semiconductors. While the "K-Chips Law," which provides tax breaks for semiconductor investments, has passed, critical measures like the semiconductor special law, including the sought-after exemption from the 52-hour workweek, remain delayed due to political infighting.
In a competitive global market, Korean companies must invest more in technology development to maintain their competitive edge. The government must prioritize policies that create an environment where domestic firms can compete effectively. Failure to act swiftly may see Korea following the path of Japan’s semiconductor industry, which, after losing its dominance for four decades, is now trying to revive itself. The window to turn this crisis into an opportunity is rapidly closing.
Translated using generative AI and edited by Korea JoongAng Daily staff.
with the Korea JoongAng Daily
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