Korea needs to reduce its semiconductor export dependence on China and strengthen chips-related exports to the U.S. to gain a greater global market share, according to a report released Wednesday by the Korea International Trade Association (KITA), titled “Korea’s opportunities and threats due to global semiconductor supply chain reorganization.”
The report states that Taiwan benefited the most from the U.S.-led reorganization of the global chip supply chain, and Korea did not benefit much to secure competitiveness in the U.S. semiconductor market.
The U.S. reorganized its semiconductor supply chain centered on its allies, drastically reducing semiconductor imports from China and switching suppliers mostly to Taiwan and Vietnam.
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China’s share of U.S. semiconductor imports plummeted from 30.1 percent in 2018 to 11.0 percent last year, while Taiwan’s share rose from 9.7 percent to 17.4 percent and Vietnam’s share increased from 2.6 percent to 9.1 percent.
However, Korea’s share increased by only 2.1 percentage points from 11.2 percent in 2018 to 13.2 percent in 2021, indicating only a slight benefit from the U.S. reduction in reliance on China compared to other countries.
“The U.S. supports a 25-percent tax credit for semiconductor facility investment, and Taiwan also proposed an amendment to its Industrial Innovation Act in November to expand the tax credit ratio for semiconductor R&D and facility investment from 15 percent to 25 percent,” the report stated. “Korea only increased the tax credit for large corporations on semiconductor facility investment from the current 6 percent to 8 percent, so there is concern that the country will fall behind in the global semiconductor competition. In the short term, we need to strengthen the stability of supply and demand for key equipment and materials by participating in the supply chain reorganization led by the U.S.”
The report emphasizes the need to secure competitiveness in the U.S. semiconductor market in order to break away from excessive dependence on China in semiconductor exports and secure new opportunities and demand.
China is Korea’s largest export destination for semiconductor-related items such as system semiconductors, memory semiconductors, semiconductor equipment and semiconductor materials. Last year’s exports to China broke down to: 32.5 percent of Korea’s system semiconductors, 43.6 percent of its memory semiconductors, 54.6 percent of its semiconductor equipment and 44.7 percent of its semiconductor materials.
Source:Korea Times
