Electrical Equipment / Components & Telecoms

The shrinking of semiconductor international trade exports has made the Korean industry feel anxious. "The slump in the semiconductor industry may last until next year and the year after," South Korean TV reported on the 12th that semiconductors, as South Korea's largest export commodity, are showing unusual trends recently. Semiconductors account for 20% of South Korea's total exports. With consumption shrinking due to slowing global economic growth, and the rise of China's semiconductor industry, the future of South Korea's semiconductor industry faces greater uncertainty.

Predicting the semiconductor crisis will emerge

According to South Korean TV reports, trade data in August showed that due to the weak global economy, South Korean semiconductor products experienced a decrease in international trade exports for the first time in two years. In addition, the United States has intensified its restrictions on China's high-tech industry. Most industry prospects believe that the semiconductor industry will be one or two in the future. will face a continued recession every year. While the U.S. is continuing to contain China, Apple's decision last month to choose a Chinese company, Yangtze Memory Technologies, as a memory semiconductor supplier for its new models, has made South Korean companies feel a sense of more urgency to compete, the report said. In the global NAND flash memory market, South Korea's Samsung Electronics and SK Hynix currently occupy the first and third positions with a market share of 35.5% and 18%, but China's Yangtze River Storage will take the opportunity to become an Apple supplier and will officially start chasing South Korea. enterprise.

In fact, South Korea has experienced a trade deficit with China for four consecutive months, largely due to the impact of sluggish semiconductor exports to China. The Chinese market accounts for 60% of South Korea's total semiconductor international trade exports. South Korea's semiconductor exports to China fell 3.4% in August from a year ago, which also brought an abrupt end to South Korea's 26-month increase in semiconductor exports since June 2020.

According to related reports, global inflation has led to shrinking demand, semiconductor prices have fallen, and the United States has increased export restrictions on China such as semiconductor equipment or software, and the uncertainty of South Korea's semiconductor industry is increasing. There are even predictions that semiconductor prices may collapse in the fourth quarter. In this case, the US semiconductor-related export restrictions to China are even more of a crisis factor for South Korean companies.

A related person from a Korean semiconductor company said, "On the basis of the general decline in product market prices, the US semiconductor policy remains to be seen. Korean companies believe that the need to adjust investment or employment is increasing, but currently it is impossible to formulate a clear path for change. plan.” Kim Yangpeng, research member of the Korea Industrial Research Institute, believes, “With the oversupply of semiconductors, the reduction in global demand and the increase in inventories, the risks of falling prices, rapid catching up of Chinese technology, and intensifying technology competition between the United States and China occur simultaneously. Certainty is increasing."

Faced with three problems

According to an industry survey, most semiconductor experts believe that the Korean semiconductor industry is in a state of crisis. According to the "Korea Semiconductor Industry Expert Survey" recently conducted by the Korea Chamber of Commerce and Industry with 30 semiconductor experts as the target, 56.7% believe that "crisis is emerging", 20.0% believe that "in crisis", and more than 60% believe that Experts predict the crisis will last "at least until the next year". Fan Zhenxu, a professor of electronic engineering at Sogang University in South Korea, said, "If the turmoil in the semiconductor industry in the past was mainly due to temporary deterioration of the external environment and the semiconductor cycle, then this situation is the supply chain competition between powerful countries that does not know when to end, and China's The industry's sense of crisis and unease is stronger than ever."

Facing South Korea's increasingly obvious "core anxiety" recently, Da Zhigang, a researcher at the Northeast Asia Research Institute of the Heilongjiang Academy of Social Sciences and chief expert at the Northeast Asia Strategy Research Institute, said that the main exporter of South Korea's semiconductor industry in international trade is China, which is limited by the US's influence on the chip industry. South Korea's export volume to China will be seriously affected, and South Korea's domestic production capacity is temporarily lacking to undertake the market, which makes South Korea anxious. In fact, South Korea should face up to the fact that with the development of China's economy and technology, the continuous improvement of the semiconductor industry chain and the strengthening of independent chip research and development capabilities, China's semiconductor market share will continue to expand in the future.

Lyu Chao, chief researcher of the North Korea and South Korea Research Center of the Liaoning Academy of Social Sciences, said that South Korea's chips mostly serve high-end products, while China's chips are concentrated in low-end products. Therefore, China has long been South Korea's main chip importer, and South Korea's trade It has also been a surplus over the years. However, in recent years, China has invested a lot of manpower and material resources in chips, the chip has developed rapidly, the field of high-end chips has made rapid progress, and its market competitiveness has been continuously improved.

Lv Chao believes that South Korea's current "core anxiety" is mainly due to the three major problems of incomplete South Korea's semiconductor supply chain, small domestic market capacity and over-reliance on overseas orders. "South Korea's chip products account for a very large proportion of foreign trade. When the international semiconductor market fluctuates in supply and demand, South Korea bears the brunt. Especially in the semiconductor supply chain, once problems occur, South Korea's chip industry will be greatly affected."

"South Korea's semiconductor raw materials are increasingly reliant on China," South Korea's Newsis News Agency reported on the 12th. As the United States increasingly excludes China from the international trade semiconductor supply chain, South Korea's key semiconductor raw materials are becoming more and more important to China. Dependencies are increasing.

Efforts to balance Sino-US factors

Statistics released by the Korea Customs Service (Customs) on the 12th show that the import value of hydrogen fluoride used for semiconductor manufacturing from January to July this year was 65.168 million US dollars, of which 78.1% were imported from China. In 2019, China-made hydrogen fluoride accounted for 50% of South Korea's total imports, but it soared to 70.1% last year. In recent years, South Korea has been trying to increase the proportion of localized production of hydrogen fluoride after the trade dispute between South Korea and Japan over the issue of forced labor judgments. Therefore, there is a view that excessive dependence on China for key semiconductor raw materials "may also cause major problems."

As an indispensable neon gas in the semiconductor production process, South Korea's imports from China are also soaring. This year, South Korea's total import of neon gas reached 480 million US dollars, and Chinese products accounted for 45.0%. This year, the amount of neon gas imported by South Korea from China has soared by 1594.7% compared with last year. In particular, the price of neon gas per kilogram has risen from US$216 per kilogram last year to US$2553 this year, an increase of more than ten times. The average price of neon gas in July broke an all-time high of $3,221 per kilogram. Not only that, data released by the Korea Foreign Economic Policy Research Institute show that 96% and 84% of the key raw materials for South Korean semiconductor production, gallium and tungsten, are imported from China. Some analysts believe that South Korea's imports of key semiconductor raw materials to China will not be significantly reduced in the short term.

"The US Semiconductor Support Act, which aims to attract global investment in North American production capacity, has limited effect. Will South Korea's semiconductors be thrown cold water?" South Korea's "Herald Economy" reported on the 12th that a recent research team led by the chief economist of Goldman Sachs in the United States analyzed It is believed that the US Semiconductor Support Act is not sufficient to solve the semiconductor supply chain problems of the past few years. Major Korean semiconductor companies are expecting to benefit from the U.S. "Semiconductor Support Act" and increase investment in the United States. However, if the investment cost and operating cost of local semiconductor factories in the United States are considered, industry insiders said that from the perspective of semiconductor manufacturing companies, it is difficult to obtain immediate and large benefits from the Semiconductor Support Act. Therefore, South Korea cannot pin the future of the semiconductor industry on the United States.

In the face of the "Quartet Alliance of Chips" that the United States is trying to attract South Korea to join, a recent survey by the Korea Chamber of Commerce and Industry shows that 36.6% of the respondents believe that it has a positive impact on South Korea, while 46.7% of the respondents hold a negative view.