A report claimed that Korea should also found a world-class semiconductor design company via active M&As in order not to lag behind in the intellectual semiconductor market with an artificial intelligence era becoming more visible.

According to the Intellectual Semiconductor Market Report by the KOTRA on July 21, TMR, a global market survey company, predicted that the world System on Chip (SoC) market will grow to US$71.98 billion in 2021 from US$35.95 billion in 2014. This means that the market will grow 10.5% annually. This is a contrast with the fact that a sharp drop in prices of key products in the memory semiconductor market, decreasing the size of the market.

Intellectual semiconductors most sought after in the system semiconductor market these days refer to system semiconductor-software convergence technology. The convergence technology enables smart devices such as smart cars, the internet of things (IoT) and wearable devices to offer intellectual services. Typical intellectual semiconductors include smart recognition and control semiconductors that enable face recognition and users’ preference analysis, telecommunication semiconductors used to realize high-speed smart telecommunication and high-speed computing semiconductors that can quickly process big data.

This market is dominated by foreign companies that can directly design core processors such as Intel, Qualcomm, Nvidia and IBM. Samsung Electronics and SK Hynix are global leaders in the memory semiconductor sector but in the fabless sector, a semiconductor design sector, they are not. According to IC Insights, last year, Korean fabless companies accounted for less than one percent of the entire market. It is forecast that the percentage will shrink this year.

According to the Korea Semiconductor Industry Association, the association had 77 semiconductor design firms as of February, this year. Some of them produce memory semiconductors but most of them design system semiconductors. Among them, only one or two companies are system semiconductor design companies with world-class competitiveness.

“As the IT industry is headed for convergence, now the market demands single chips with multi functions even though it was fine for fabless companies to produce specialized products only in the past,” explained a representative of the Ministry of Commerce, Industry and Energy.

The point is that cost is too much for small and mid-sized fabless companies to enter a new technology sector and develop new technology in addition to their main business sectors. “Development cost is so high that whether or not new technology will work out will determine the success or failure of small and mid-sized companies,” the representative said. “Therefore, a method for stable convergence is M&As.”

By: DocMemory
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