Amid intensifying global competition, South Korea’s semiconductor industry is confronting structural challenges across technology, markets, and supply chains.

The competitiveness of Korea’s memory semiconductor sector peaked in 2018 and has since been declining. Korea’s share of memory exports to China fell from 45.7% in 2018 to 31.7% in 2024. An analysis of memory semiconductor patents held by the global top 10 semiconductor companies indicates that while Korean firms maintain a quantitative edge, they are increasingly challenged by U.S. firms such as Micron and SanDisk in terms of technological quality.

In the system semiconductor sector, although Korean firms possess a substantial number of patents, their innovativeness and impact remain weaker compared to leading global players such as Apple and Qualcomm.

The global semiconductor industry is undergoing a structural bifurcation, with high-end semiconductors (e.g., AI, HPC) increasingly centered around the United States, and commoditized semiconductors around China. South Korea remains deeply integrated into the China-centered supply chain, making it vulnerable to heightened geopolitical risks, while its industrial division of labor with the United States and Japan remains limited.

In 2024, Korea’s semiconductor export shares to China stood at 31% for memory, 34% for system semiconductors, and 29% for optoelectronic components. Imports from China accounted for 72% of memory, 9% of system semiconductors, and 26% of optoelectronic components, highlighting the strong interdependence between the two countries’ supply chains.

In contrast, Korea’s 2024 semiconductor export shares to the United States were considerably lower: 9.6% for memory (22% for DRAM alone), 2.8% for system semiconductors, and 17% for optoelectronic components. Imports from the U.S. accounted for just 0.4% of memory, 7% of system semiconductors, and 2.6% of optoelectronic components, with Korea mainly exporting memory semiconductors while relying on the U.S. for system semiconductor imports.

Regarding Japan, Korea’s 2024 export shares were 0.6% for both memory and system semiconductors, and 5.5% for optoelectronic components. Imports from Japan accounted for 0.2% of memory, 14.6% of system semiconductors, and 34% of optoelectronic components. Japan has established an independent memory semiconductor supply chain, while Korea remains dependent on Japan, particularly for power semiconductors and other system semiconductor components.

In response to the restructuring of the high-end semiconductor supply chain centered around the United States and the expansion of global demand, South Korea should intensify cooperation with the United States, particularly by synchronizing more closely with the U.S. semiconductor ecosystem through joint design and technological collaboration.

It is imperative to establish a global co-production system that bridges the U.S. fabless-centered structure with Korea’s strengths in foundry and memory manufacturing. This entails sharing intellectual property (IP) with U.S. fabless firms, jointly developing platforms, and building collaborative verification systems.

Korea should differentiate itself by integrating its strengths in memory technologies—such as HBM, CXL, and DRAM—with AI computing applications. Strengthening technological alliances with the U.S. should focus on areas where demand is surging, such as HBM3/HBM4 and high-bandwidth interface technologies for AI and HPC markets.

Investment in the United States should initially prioritize establishing small, strategic hubs, such as AI/HPC-specialized test lines, design support centers, and packaging R&D hubs. These bases would serve as platforms for testing the market and could be expanded gradually based on performance and demand.

Over the medium to long term, Korea must pursue strategic investments to secure global competitiveness in system semiconductors. This includes improving patent quality, strengthening IP portfolios, and fostering a dynamic design house ecosystem. Furthermore, Korea should seek to transform technological dependence into strategic partnerships through joint development, licensing agreements, and design collaboration with leading U.S. fabless and IP firms such as NVIDIA, AMD, and Intel.