South Korea could emerge as a significant player in the chip production industry, luring several global tech companies to its shores, with a growing reputation for advanced semiconductor capabilities, government support, and strong partnerships. Over the last few decades, the country has steadfastly invested in the industry, which resulted in the development of cutting-edge technologies, compelling companies to consider investing in the sector. These investments translated into higher revenues for chipmaking companies, making South Korea an attractive destination for multinational corporations.
According to a recent report, South Korea's semiconductor capabilities continue to impress, and its government continues to extend support, providing incentives and tax breaks to lure more significant investments in the industry. South Korea's largest semiconductor company, SK Hynix, for instance, boosted revenues for Q2 of 2021 to KRW 10.367 trillion ($8.99 billion), up 15% QoQ, amid an increase in DRAM chips sales.
Several global tech companies have taken note of South Korea's rise in the chip production industry, leading them to establish strong partnerships in the sector. Apple, a globally recognised tech giant, procures chips from Samsung, while Equinix, a leading data centre provider, has secured SK Hynix's memory chips for its centres.
Despite the country's ambition to become a chip production hub, South Korea faces stiff competition from other countries such as China, which has been increasing its semiconductor industry at a rapid rate. To tackle this challenge, South Korea's government has developed a five-year plan to boost the industry while focusing on AI and 5G technologies. South Korean companies are also investing heavily in EUV and other new technologies to maintain their leading edge in the industry.
South Korea's potential in the semiconductor industry has been widely recognized. According to a report, South Korea's semiconductor sector generated revenue of $99.6bn in 2020, and this is expected to exceed $100bn in 2021. Compared to its rival, Taiwan, the semiconductor industry was responsible for about 20% of South Korea's entire exports last year, compared to 32% for Taiwan.
With its highly advanced capability in semiconductor production and favourable government policies, South Korea seems to be on track to become a vital hub in the global semiconductor industry.
