The Semiconductor Sector by Value Chain Segment: Analysis of Competitiveness and Policy Directions

Semiconductors are a key component of electronic devices used in high-tech operations such as computation, control, transmission, conversion, and storage. The chip sector spans manufacturing to downstream industries such as manufacturing equipment and materials. This paper analyzes the competitive advantages of segments of the semiconductor industry value chain by using qualitative and quantitative metrics. The world's chip superpower is the US, with the largest share of the global semiconductor market and the best competitiveness in R&D and design on the planet. Taiwan and Korea, meanwhile, are more competitive in semiconductor manufacturing. Based on an analysis of overall competitiveness, Korea is fifth among the six biggest players in the sector, which include the US, Japan, and Taiwan, but is at a competitive disadvantage compared to its peers outside of the memory semiconductor sector, where it is dominant. Moreover, China has surpassed Korea in overall competitiveness since the 2020 rankings. It is important for Korea to maintain its competitiveness in memory semiconductors, a sector where it has superior competitiveness, through the development of next-generation chips and a "super gap" strategy to maintain its lead. In the fabless segment for system semiconductors, which Korea is relatively weak in, alignment with demand industries is needed to drive growth and the foundry segment must secure market share in high-tech segments.