Future of S. Korea's non-memory semiconductor industry

정부, '비메모리 반도체’ 육성 이유 및 전망은? Late last month, the South Korean government announced three new growth engines to improve the nation's economy. One of them was system semiconductors. To tell us more about the topic… we have our Ko Roon-hee in the studio. Roon-hee, start off by defining the term for us. What type of semiconductors is the government talking about? Hi Aram. So let me begin by explaining the differences between memory semiconductors and non-memory semiconductors. I'm sure most of the viewers are familiar with memory chips. The purpose of these chips is storing data. Examples include DRAM and NAND flash... which can be mass produced. South Korea is leading the world's memory chip industry. Data shows that Korean tech giants such as Samsung Electronics and SK hynix accounted for around 75-percent of the global DRAM revenue as of the 3rd quarter last year. Then there is the non-memory sector... the purpose of which is to process data. Examples include central processing units used in computers and these components are normally produced in small quantities. In 2018, local companies accounted for only 3-point-1 percent of the global market share. System semiconductors,... which the government hope can act as a growth engine to improve the economy,... belong in the non-memory category. Experts refer to system semiconductors as system integrated circuits or system ICs. Okay, now we know that system IC basically means non-memory chips... tell us the background behind the South Korean government's decision to focus on turning this sector into a growth engine. Sure Aram. Simply put, the system IC industry actually has a larger market share than memory chips. So it's beneficial for Korea to venture into that much bigger market. Let's look at a graph that explains this trend. According to IHS Markit, the global market size of the system IC industry marked around 246-point-6 billion U.S. dollars in 2018... while memory semiconductor field made about 163-point-8 billion dollars. These markets are expected to continue to grow... By 2022, the figure for system is expected to stand at 265-point-9 billion dollars and memory at 164-point-9 billion dollars. Another reason behind the push from the government is falling exports in the nation. According to the trade ministry, exports have been falling on-year for five consecutive months,... mainly due to a fall in prices and lower demand for memory chips which account for roughly 20-percent of total outbound shipments. Since Korea's economy is so reliant on exports,... the government needed to come up with some kind of measures to boost the numbers. So what are some of the government's plans to foster the system IC industry? Before I get into specific plans, let me first explain two technical terms. One is fabless companies, and the other is foundry companies. Fabless companies refer to firms that design and develop semiconductors but outsource the fabrication of the chips... Qualcomm is one example. Foundry companies mean semiconductor manufacturers that make chips for third parties... Samsung Electronics is a foundry company. The government's specific plans include... connecting "fabless" companies with other firms in need of chips, providing financial support for "foundry" companies, and creating an ecosystem where fabless and foundry firms can cooperate. The government plans to invest more than 840-million U.S. dollars in the industry from 2020 to 2029. I actually had a chance to visit one of the fabless firms in Korea called Nextchip. It designs and develops system semiconductors processing 'camera video signals'. Recently it has been focusing on developing 'advanced driver assistance systems' chips for automotive cameras. These chips can automatically recognize pedestrians and cars driving at high speeds. The chief technology officer at the company has high hopes for the government's plan. "There is a shortage of workers... and chip production costs are also increasing. For this plan to work well, I hope the entire semiconductor ecosystem experiences high-quality growth... so that it can stimulate competitiveness for various sectors including fabless and foundry companies." So, it seems like this ambitious plan is being welcomed by those working in the industry. What are experts saying? I talked to some experts and asked them how they think the government's plan will have an effect on the local economy. Take a listen. "In the system IC field, it is very important for companies to dominate the market in advance. Therefore, Korea should pay attention to what products related to IT or IoT are developed in the future. And designing semiconductors accordingly is necessary." ... Arirang News Facebook:   / arirangtvnews