China’s Rise in the Semiconductor Market: A New Era in Memory Technology
China is making significant inroads in the semiconductor industry, particularly in memory chips, an area long dominated by South Korean giants like Samsung and SK Hynix. Despite facing export tariffs from the United States, China has managed to secure the second position globally in memory technologies.
According to a recent study by the Korea Institute of Science and Technology Evaluation and Planning (KISTEP), China’s semiconductor capabilities are growing stronger across various technology sectors, including memory chips. This report highlights a major shift, revealing that China has now surpassed South Korea in key areas of semiconductor technology, including memory production.
A Changing Landscape in Semiconductors
The KISTEP report is based on insights gathered from 39 South Korean semiconductor experts in early 2024. It underscores a significant change in the semiconductor landscape, noting that China has outperformed South Korea in the memory chip sector, which has been a stronghold for companies like Samsung Electronics and SK Hynix for years. Currently, China sits in second place globally, right after the United States, marking a dramatic change from KISTEP’s 2022 findings when South Korea was ranked second and China was in third place.
The report emphasizes, "Even in the memory market, where Korea had maintained its leading position, Chinese semiconductor firms are steadily increasing their market share." Furthermore, it notes that Chinese manufacturers are ramping up their production of older chips, narrowing the technology gap with global leaders.
Evaluating Progress in Semiconductor Technology
The report details how China’s high-density resistive memory technology scored 94.1%, surpassing South Korea’s score of 90.9%. This is particularly striking as memory technology has been one of South Korea’s strongest sectors. In other critical areas, China scored 88.3% in high-performance and low-power AI semiconductor technology, compared to South Korea’s 84.1%. In power semiconductors, China achieved a score of 79.8%, while South Korea lagged at 67.5%. In next-generation high-performance sensing technology, China’s score was 83.9%, just edging out South Korea’s 81.3%.
Both countries scored equally at 74.2% in advanced packaging technology, but Taiwan leads in the commercial application of this technology. Meanwhile, the U.S. continues to rank highest in most semiconductor sectors regarding foundational capabilities.
While South Korea still maintains better processes and mass production capabilities, the report indicates that China excels in foundational development and design. It points out weaknesses in South Korea’s foundational capabilities, suggesting improvements are necessary to maintain its competitive edge.
Chinese firms have been progressing rapidly, notably ChangXin Memory Technologies (CXMT), which produces dynamic random access memory (DRAM) chips using 16-nanometer technology. Although they are still behind the 12-nm and 14-nm technologies used by leaders like Samsung and Micron Technology, this marks an important step in closing the technological gap.
Facing Challenges in the Global Chip Race
The report also raises concerns regarding geopolitical tensions that could impact South Korea’s semiconductor industry, such as the risk of losing export markets due to U.S. controls. Additional challenges include losing skilled professionals, increasing competition from AI semiconductor technology, and rapidly changing supply chains.
This scenario poses serious challenges for South Korea, which has long relied on its semiconductor industry for economic success. To sustain its leading position, it must address weaknesses in foundational capabilities and design technology.
Taiwan continues to excel in advanced packaging technology, while the U.S. leads in overall semiconductor technology. However, China’s rapid advancement in the face of international restrictions reveals an effective national strategy focused on achieving technological self-sufficiency.
As China’s semiconductor sector continues to evolve, particularly in memory technologies, the global semiconductor landscape is poised for significant changes. China’s growing capabilities suggest that, despite the challenges posed by export controls, the country is making noteworthy strides toward becoming self-reliant in technology.
