April 2014

The global semiconductor market hasbeen growing by more than 6.5 per-cent annually, from USD 231.7 bil-lion in 2009 to USD 318.1 billion in

2013. The Korean share of the world marketgrew considerably, from 11.7 percent in 2009to 16.2 percent in 2013.

The world semiconductor market is predictedto grow by an average of 1.8 percent annuallyto reach the size of USD 361.1 billion in 2018.

System semiconductors take up 62.5 percentof the total semiconductor market and theirshare is forecast to grow by an average of 2.8percent annually by 2018.

The system semiconductor market is show-ing particularly high growth in the mobile area.Semiconductors used in smartphones andtablets are forecast to grow by 14.6 percent and20.6 percent, respectively. The mobile AP,which integrates peripheral functions, hasbecome a key part of the market, and the IPmarket, such as ARM core, is also expected togrow quickly.

Categories of the SemiconductorIndustryThe semiconductor industry can be divided

into four categories: semiconductors, includingmemory and system semiconductors; the mate-rials used in semiconductors; the equipmentused to manufacture semiconductors; and semi-conductor equipment parts used to manufacturethe equipment.

Memory semiconductors are the main mem-ory unit used to store the data of electronicproducts and are used as the key parts of com-puters, notebooks, mobile devices, camcordersand cameras.

DRAM and SRAM are the leading examplesof volatile memory. DRAM’s strengths includehigh integration and low power consumption,while SRAM boasts high speed and is thereforemostly used for embedded memory.

Nonvolatile memories are those semiconduc-tors that maintain data even when power is cutoff. Flash memory is the leading example ofnonvolatile memory and is divided into theNAND type, which is mostly used in mobiledevices for data storage, and the NOR type,which is mostly used to store programs.

The system semiconductor performs opera-tion, control, data transmission and conversionin computers, mobile devices, home appliancesand the electronic modules of automobiles. It isa common name for the electronic element inthe final unit of electronic products.

In addition, equipment such as the stepper &scanner, etcher, CVD, CMP and wet station isused to manufacture semiconductors whilematerials such as the wafer, photo resist, chemi-cals, gas, CMP slurry and MASK are used inthe semiconductor.

Application of Next-GenerationSemiconductorsNext-generation semiconductors include the

advanced concept multimedia device, the mul-ti-functional smart device, the processor/mediasemiconductor used in wearable devices, thehighly functional communication-broadcastingconvergence semiconductor integrating 2G,3G, 4G and 5G communications, the high-relia-bility and high-safety automobile semiconduc-tor operating electric and self-navigating vehi-cles and the power semiconductor, which per-forms power transmission and transformationwhile minimizing the leakage of electricity.

In the future, the semiconductor is predictedto evolve into the “multi-functional conver-

gence semiconductor,” which maximizes eco-nomic efficiency, user friendliness and produc-tivity by integrating the operation, control,transmission and conversion functions of thesignal, data and energy of electrical and elec-tronic systems into a single chip.

Semiconductor LeadersThe semiconductor industry has a high entry

barrier and structure in which the winnermonopolizes the market and profits. In all areasof semiconductors, the top three leaders occupymost of the market share.

Qualcomm of the United States, MediaTekof Taiwan and Samsung of Korea together havea 70 percent share of the mobile phone semi-conductor market while Samsung and SKHynix of Korea and Micron of the UnitedStates have a more than 80 percent share of thememory semiconductor market. Intel and AMDof the United States have a 91 percent share ofthe CPU market while Infineon of Germanyand TI, Fairchild and STMicro of the UnitedStates have a more than 50 percent share of theanalog semiconductor, automobile semiconduc-tor and power semiconductor markets. Thus,the few leaders dominate, and market domina-tion of the early starters and nations is expand-ing. TMSC and other Taiwanese companieshave a more than 70 percent share of the semi-conductor foundry service market. AppliedMaterials and LAM Research of the UnitedStates, Tokyo Electron of Japan and ASML ofthe Netherlands have a more than 90 percentshare of the equipment/materials market.

Korea’s Semiconductor Industry Korea is globally competitive, as the memo-

The Situation With Semiconductors Korea, a leader in the growing semiconductor market, is poised to expand

its global presence

ry semiconductors manufactured by SamsungElectronics and SK Hynix take up a 52.4 per-cent share of the world market. They areexpected to maintain their competitive edge forsome time.

However, Korea does not manufacture suffi-cient system semiconductors to meet the coun-try’s needs. It has a 30 percent share of theworld market for mobile devices includingsmartphones, 50 percent of the world digitalTV market and 8 percent of the world automo-

bile market. It imports most of the semiconduc-tors needed in them. Key semiconductors usedin the baseband modem, RF IC, CPU and digi-tal TV as well as the semiconductors used inECU and automobiles are what Korean compa-nies need.

Moreover, most of the semiconductor equip-ment needed by domestic semiconductor manu-facturers must be imported. Lithography equip-ment, ion implanters, etc., used in the manufac-turing of semiconductors must also be imported.

Korean companies actively develop in globalmarkets because it is difficult to grow in thelimited Korean market with a limited numberof products. China is the key overseas market.Korean companies already manufactureDRAM and NAND flash memories in Chinawith Korean technology. In the system semi-conductor area, many small fabless companieshave been established and are operating localmarketing bases. Semiconductor equipmentand materials companies are also trying to selltheir products in China directly in response tothe Chinese government’s policy of developinglocal semiconductor production. For some time,the Chinese market will remain a very attractiveone for Korean semiconductor companies.

Following China, Korean companies willstrive next to develop in markets includingMalaysia, Indonesia, India, Vietnam and otherSoutheast Asian countries.

By Ki-hyun AhnDirector

Korea Semiconductor Industry Associationyoung.chang@kotra.or.kr

07

April 2014

The Market06

Semiconductor Market Size and Forecast

* Source: iSuppli, 2014.3

(Unit: USD 100 million)

World Market

KoreanProduction

Memory Semiconductor System Semiconductor DiscretesTotal Memory Semiconductor System Semiconductor Discretes Total

Type 2018 (E) 690

2,258663

3,61138022699

705

Growth Rate ('13 - '18) 1.0%2.8%3.4%2.6%2.0%14.6%11.4%6.5%

2013655

1,965561

3,18134311458

515

Global Semiconductor Market and Share of Korean Production

* Source: iSuppli (2014.3)

(Unit: USD million, %)

Semiconductor World MarketKorean Production(Share)

2010307,627 43,724 (14.2)

2011310,629 43,038(13.9)

2012303,050 44,615(14.7)

2013318,147 51,516(16.2)

2009231,677 27,132 (11.7)

Type