Skip to content
8 min read

Growth for Korean Fabs Means Opportunities for Overseas Suppliers

Growth for Korean Fabs Means Opportunities for Overseas Suppliers

Manufacturers of semiconductor equipment and materials can expect to see greater opportunities in Korea as Samsung Electronics and SK Hynix, the leading fabricators in the world’s second-largest market, undertake aggressive expansion plans. Despite Korea’s strengths as a producer of chips, equipment manufacture is dominated by overseas firms, a reality that is unlikely to change. As a result, Korea can be considered an attractive opportunity for companies in the semiconductor industry. 

Korea emerged as the second-largest producer of semiconductors in 2013, replacing Japan in the #2 spot. Korea’s share of the global semiconductor market is 16%, driven by Samsung Electronics and SK Hynix, which are the second and fifth largest fabricators worldwide. But rather than resting on their laurels, both firms have announced aggressive expansion plans with the goal of becoming the world’s largest fabricator.

Samsung is in the process of building a $14bn foundry south of Seoul that will have the largest capacity in the industry, bigger than its two other plants put together. The new facility will be focused on producing DRAM chips, as well as targeting the mobile, server and IoT sectors.

SK Hynix, meanwhile, has announced a $38bn plan for opening two new foundries by 2024, as well as increasing capacity at its M14 foundry in Icheon, Gyeonggi province. The first of these, scheduled to open in 2019, will be located next to its Cheongju facility in North Chungcheong province and is expected to focus on NAND flash memory.

Although Korea has two of the world’s largest fabricators, it is nowhere near as strong when it comes to manufacturing equipment and semiconductor-related solutions. International firms dominate the market and this is particularly true for equipment that requires intensive investments in technology, such as photolithography or metrology.

The Korean government considers the semiconductor industry to be of strategic importance and has taken steps to grow the $8bn equipment market. These steps include providing support for R&D that will directly benefit Korean manufacturers, as well as encouraging the large fabricators to purchase domestically. Nevertheless, while the domestic market share has risen over the past 5-10 years, the market for technology-intensive equipment and services remains dominated by international firms.

Korean companies are strong in packaging, bonding or deposition equipment, but less so in measuring or testing, or areas such as etching, photolithography and CMP. As there are few domestic players, the large fabricators have no choice but to source from overseas suppliers, even with government incentives to purchase locally. This means more and more opportunities for western firms in this space looking to expand into Korea.

About the Author

Adeel Ahmad

Adeel has lived and worked in Korea since 2008, with experience working in both the public and private sectors. Prior to joining Intralink, he assisted international organisations on setting up and expanding their Korean operations as well as advising Korean organisations on how to develop their presence overseas. His main clients were software developers, government and nongovernmental organisations.

Adeel also worked with the Canadian Embassy in Seoul for four years where he advised on Korean social and economic trends

This web site uses cookies to provide the best experience. Please accept, or read our Cookie Policy.