Korea’s system semiconductor exports to fall 2.6% this year despite chip boom

(Yonhap)

South Korea’s system semiconductor exports are projected to drop 2.6 percent this year despite a boom in memory semiconductors, raising concerns about structural imbalances in the semiconductor industry.

The Korea International Trade Association (KITA) announced on Sunday that the country’s system semiconductor exports are projected to reach $48.2 billion this

This contrasts with expectations that memory semiconductor exports will rise 9.6 percent over the same period from $114 billion to $125 billion.

“The spread of AI is driving increased demand not only for high value-added semiconductors such as high-bandwidth memory (HBM), but also for traditional memory semiconductors like DRAM and NAND flash, which is leading domestic companies to shift their facilities in that direction,” said a KITA official.

System semiconductors include foundries that manufacture chips on a contract basis according to design specifications, as well as central processing units (CPUs), application processors (APs), and other chips that perform functions such as computing, control, and processing.

“System semiconductors account for more than 60 percent of the global semiconductor market, and demand is expected to rise sharply,” said an official from the Korea Fabless Industry Association. “The fact that this sector is less susceptible to economic fluctuations is another reason we must foster our system semiconductor industry.“

While the memory semiconductor cycle is currently in an upswing, observers noted that system semiconductors must be developed to prepare for the inevitable downturn.

According to the Korea Fabless Industry Association, the share of the memory-centric Integrated Device Manufacturer (IDM) market fell from 70 percent in 2021 to 56 percent in 2024.

The share of the fabless market, on the other hand, rose from around 30 percent to the mid-40 percent range over the same period.

The fabless market combines the added value of companies that design semiconductors and foundry companies that manufacture them on a contract basis.

Of this market, the industry estimates that the sales of Korean fabless companies amount to around $3 billion, accounting for only about 1 percent of the entire global fabless market.