Bit by Bit: A Strategic Approach for Korea in the Non-Memory Chip Market

In 2022, the global semiconductor market was valued at USD 600 billion (approximately KRW 780 trillion). Memory chips represented 23.9 percent of that estimated market, while non-memory chips claimed the remaining 76.1 percent. In the global non-memory semiconductor market, South Korea is ranked sixth, after the United States, Europe, Taiwan, Japan, and China. Much of the revenue Korean non-memory semiconductor companies generate is concentrated in the consumer electronics sector, fueled by strong domestic demand for products such as smartphones and televisions produced by large corporations. The non-memory semiconductor market is incredibly varied and complex, as the demand sectors for these chips require them for a wide variety of functions and broad performance envelope. Industries that use these chips are also far more diverse than the industries that use memory chips. The subsegments of the non-memory chip market are dominated by established players, and these niches are protected from latecomers by extremely high barriers to entry. The geopolitical landscape is rapidly shifting, with the US-China rivalry intensifying at the same time that semiconductor technologies are becoming more and more sophisticated. It is in this global environment that the Korean government is primed to pour fiscal resources into an effort to foster the domestic non-memory semiconductors industry. But in order for this kind of investment to be effective, the government first needs to objectively assess Korean companies’ position in the global non-memory semiconductor market, and execute its investment following a comprehensive and maximally efficient national strategy.