According to data from the US market research firm IC Insights, China Hisilicon and Uni-SoC were ranked among the top 10 global fabs based on 2017 sales. Hisilicon positioned itself at 7th on the list, and Uni-SoC (formerly Spreadtrum RDA) came out as 10th. Hisilicon is a subsidiary of Huawei, and Uni-SoC is a subsidiary of Tsinghua Unigroup. No Korean company has ever been ranked on this list.
The size of the Chinese system semiconductor industry has long surpassed Korea. According to the China Semiconductor Industry Association, the size of the Chinese system semiconductor industry this year is expected to exceed 10% of the global market. In contrast, the Korean system semiconductor market share is estimated to be less than 5% of the global market. If Samsung Electronics is excluded from the consideration, this percentage falls to less than 1%.
There is a large number of system semiconductor companies in China that are performing well other than Hisilicon and Uni-SoC. The semiconductor company LeadCore within the Tatang Group is emerging in the field of communications chips. It has entered into a joint venture with Qualcomm in the US and is preparing for the 5G market. Allwinner Technology, which started with a low-cost multimedia system-on-chip (SoC), has recently been achieving good results in the automotive SoC field. Then, Rockchip is doing well in the artificial intelligence (AI) speaker and Internet (IoT) SoC market. Touch solution specialist Gudix is a company that is exponentially growing in the biometric sensor market that includes global fingerprint recognition. GigaDevice is a private company that started with low-cost memory design such as NOR flash. Recently, it won the national IC fund of China and has been designing DRAM for Hefei Changshin, an axis of the Memory-Semiconductor Rise Policy fo China.
Lee Byung-In, chairman of Korea-China IC cooperative research institute, said, "Many companies are being created in the system semiconductor industry and they are rising fast,” during the breakfast seminar of the system semiconductor forum hosted by Korea Semiconductor Industry Association on the morning of the 28th,
System semiconductor design companies in China are growing exponentially. According to China Semiconductor Association data, the number of local fabless companies, which stood at 736 in 2015, doubled to 1362 in 2016, when China declared the ‘Rise of Semiconductors’. This year, the number is expected to be nearly 1600. Most of the major fabless companies in Korea have stayed in the red for several years. In recent years, a case of a start-up is difficult to find. The record is dismal compared to China.
Chinese system semiconductor industry could grow at this pace because the various downstream industries (markets) have been booming. Cultural differences also played a role. Korean fabless is limited to a specific large company as a customer. Once you make so-called 'customized' products, it is hard to sell the products elsewhere. There are various customers in China. Thus, it is not difficult to deliver the same product to small-to-medium sized customers after selling it to a large company.
National policy also played an important part. From start-up to prototype development, as well as the offering of sales incentives after commercialization, the policy support is very broad yet detailed. In the case of Shenzhen City, for semiconductor design companies, the city will provide 10% of the capital to corporations with actual paid-in capital of over 3.4 billion won. The maximum grant amount is 1 billion won, and the city also supports 50-90% of office rent. Electronic design automation (EDA) tools, design asset (IP) licensing fees and 50% of test equipment investment are offered. In particular, it provides 30% of the initial mask production cost. It supports a considerable amount of funding from the stage as a startup to commercialization. When prototypes are created, they lend up to 350 million won per company at the 2% interest rate with the technology as collateral. There is also a sales support policy that, if a customer located in the same area purchases the semiconductor, 50% of the purchase amount within a prescribed limit will be returned. There is no such policy in Korea. The EDA tool support project that used to exist has not been resumed after a recent termination.
On the 19th, President Moon ordered the state council to “raise the competitiveness of non-memory semiconductors, which are relatively less competitive than memory semiconductors, to alleviate the outweighed development in memory semiconductors, by promptly preparing measures.” It has been reported that the Ministries are preparing relevant policies under the instructions of President Moon.
Director Lee said, "It should be clearly recognized that the system semiconductor has been long overtaken by China, and a strategy to utilize their ecosystem should be established. Excessive support policies may violate WTO subsidy regulations. However, there should be something that should be learned.”
Mr. Ahn, a managing director of the Korea Semiconductor Industry Association said, "The government is establishing a policy to foster non-memory industries. If you have good opinions in relation to system semiconductor and fabless industries, please share it with the Association.”