Korea looks to future cars for restoring IC design

South Korea’s industry is calling for more efforts to nurture IC designers amid the rising demand for automotive chips. It is believed that small-scaled IC designers will be able to gain an upper hand in the future car market.

In 2021, the US dominated the global semiconductor market with a market share of 54%, followed by South Korea (22%), Taiwan (9%), Europe (6%), and Japan (6%), according to market research firm IC Insights.

Despite its strength in producing memory devices, South Korea claimed less than 1% market share in the IC design sector. There were more than 200 IC design houses in the country in 2009, but the number dropped to about 70 by 2020, according to the data of the Korea Semiconductor Industry Association.

The shrinkage results from the country’s decreased investments in IC design and related talent. Unlike big conglomerates that thrive on memory devices, small and medium-sized IC designers have little room for development, industry sources said.

South Korea’s IC design industry would resume growth if it could recruit promising companies and talent, sources in the academia said, adding that the fast-growing market of future cars is an opportunity for smaller IC design houses.

There is demand for a wide variety of automotive chips, so smaller IC designers can be more focused on developing niche products than big enterprises that tend to mass-produce commodities, they said.

The Korean government has decided to devote KRW22.4 billion (US$18 million) to cultivating 2,233 professionals for future car development in 2022 and 30,000 ones by 2030, according to Yonhap News Agency’s report.

Global automotive chips sales in 2021 topped US$50 billion, which is projected to reach US$84 billion by 2025, figures from Omdia showed.

While Korea’s DB Hitek and Key Foundry have enjoyed growing demand for 8-inch wafers used in cars, they dare not expand production capacities too fast when IC designers cannot confirm future growth. If the designers could expand their market scopes, manufacturers would be more confident in boosting investments, so as to drive up their overall revenues, industry sources said.

Global IC company market share by headquarters locations (2021)

Source: IC Insights; compiled by DIGITIMES, April 2022