Among the Top 100 Global Semiconductor Companies by Market Cap, Only Samsung and SK Represent Korea... "Government Support Crucial to Nurture Successors" (Comprehensive)

Global Semiconductor Market Cap Leader is Taiwan's TSMC
Samsung Electronics Ranks 3rd, SK Hynix Only 14th
Korean Semiconductors Overly Focused on Memory with Poor Government Support
K-Chips Act Including Increased Tax Credit Rate Pending in National Assembly

[Asia Economy Reporter Kim Pyeonghwa] Among the top 100 semiconductor companies worldwide by market capitalization, only three are Korean companies. In particular, while China is rapidly increasing its share in the global semiconductor market and the United States is strengthening government support in the semiconductor sector, the market capitalization rankings and profitability of domestic companies have declined. This result reveals the vulnerability of Korea's semiconductor industry, which is centered on memory chips, as overseas companies make advances in various fields such as foundry (semiconductor contract manufacturing) and fabless (semiconductor design). There are calls for diversified government support measures.

On the 24th, the Federation of Korean Industries analyzed the management indicators of the top 100 semiconductor companies by market capitalization based on Standard & Poor's (S&P) Capital IQ data. Korea included only three companies (Samsung Electronics, SK Hynix, SK Square) among the top 100. SK Square is an investment company spun off from SK Telecom last year and is the largest shareholder of SK Hynix. This means that the actual operators are only Samsung Electronics and SK Hynix. Compared to competitor countries?China (42 companies), the United States (28 companies), Taiwan (10 companies), and Japan (7 companies)?this number is significantly behind.

In particular, the global competitiveness of domestic companies has significantly declined compared to the past. Samsung Electronics was the world's number one semiconductor company by market capitalization in 2018 but recently dropped to third place. SK Hynix also fell four ranks from 10th to 14th by the same standard. Operating profit margins also decreased. Domestic companies' profitability dropped by 1.9 percentage points from 16.3% in 2018 to 14.4% last year. In contrast, the United States increased profitability by 3.9 percentage points, Japan by 2.0 percentage points, and Taiwan by 1.1 percentage points, respectively.

This is analyzed as a result of the domestic semiconductor industry's heavy reliance on memory chips. According to market research firm Omdia, Samsung Electronics and SK Hynix ranked first and second, respectively, in the global memory semiconductor market as of the second quarter of this year. However, as the market expansion centered on system (non-memory) semiconductors has become prominent recently, the presence of fabless and foundry companies is increasing rather than memory. A representative example is that the first and second companies that recently surpassed Samsung Electronics in market capitalization are Taiwan's TSMC (foundry) and the United States' Nvidia (fabless), respectively. According to the World Semiconductor Trade Statistics (WSTS), last year the global system semiconductor market size was $402.1 billion, 2.7 times larger than the memory market ($153.8 billion).

Park Jaeyoung, a legislative researcher at the National Assembly Research Service's Industrial Resources and Agricultural Products Team, pointed out in a recent report, "Our status as the world's number one semiconductor producer is an illusion," adding, "In the high value-added and high-growth system semiconductor sector, as well as in IP (intellectual property) licenses and fabless fields necessary for implementing sub-10nm fine processes, we are at the world's periphery."

Ultimately, there is growing support for the view that the government must devise countermeasures. It is necessary to increase the domestic industry's share at all stages of the semiconductor supply chain, including fabless, foundry, and back-end processes. The domestic corporate tax burden rate (26.9%) is twice that of the United States and Taiwan, and the facility investment tax credit rate (6%) is only one-quarter of the U.S. rate (25%), which are also issues needing improvement.

Ryu Seongwon, head of the Federation of Korean Industries' Industrial Policy Team, advised, "Taiwan recognizes TSMC as a company responsible for national security and provides more support, but in Korea, even the Semiconductor Industry Competitiveness Enhancement Act (K-Chips Act), which includes a 25% increase in the tax credit rate, has not passed the National Assembly, showing a lack of support. We need to improve the unfavorable conditions for domestic companies compared to foreign companies."

This content was produced with the assistance of AI translation services.