The Rise of Asia Semiconductors
Asia has a strong presence in the semiconductor industry globally. The region is already the biggest market for semiconductors, accounting for 60% of global semiconductor sales. (Deloitte 2020) Key region includes South Korea, Taiwan, Japan, and China.
Why Asia, Not Global?
We see the strongest momentum in Asia semiconductor companies to gain market share globally. First, industry competitiveness has strengthened over the past 20 years. In key areas like memory, foundry, IC design, and more, many Asia semiconductor companies have managed to become globally competitive. Today the industry stands on a much stronger foundation compared to 20 years ago. Second, the cost advantage in semiconductor manufacturing remains strong in Asia. Key manufacturing hubs in Asia continue to be one of the most cost-effective places to build semiconductor capacity, supported by solid infrastructure and talent pool. Third, increasing market share in Asia downstream players in consumer electronics, auto, and industrial favors local upstream supply chain.
If we look at Semiconductor market share figures from SIA (Semiconductor industry association), the US appears to have a significant lead with 47% market share, only Korea came close at 19%. However, foundry outputs are not included as it is not the final seller. Foundry is a significant cost for US fabless companies, and Asia companies account for over 85% of the global foundry market (IC insights 2020). Therefore, Asia semiconductor companies have a stronger global presence than the data suggests, and we continue to be positive about its competitiveness and growth outlook.
Current Status at Key Regions
South Korea has built up a dominant market share in memory, leading the effort to migrate memory technology and cutting cost per bit. In 2020, Samsung and SK Hynix combined accounted for 74% of DRAM (Dynamic random-access memory) market by bit shipments, and 59% market share in NAND. (UBS 2021) There is also a sizable foundry business and domestic industry supply chain to support the local ecosystem.
Taiwan has developed a closely connected manufacturing supply chain from semiconductor to hardware, which creates synergy in the region. Taiwan is competitive in chip manufacturing, IC design, outsourced semiconductor assembly and test (OSAT), raw wafer, and more. TSMC for example has the largest market share in the foundry business and continues to be the technology leader in node migration. MediaTek is one of the two major suppliers in smartphone SoC (system on chip). GlobalWafers, after the acquisition of Siltronic, will have a 25% market share in the raw wafer market, 2nd largest globally behind SUMCO in Japan. (MS 2020)
Although its global market share remains relatively low at the moment, China is catching up in the semiconductor industry with strong government support. China has already invested RMB 650bn since 2014 through its state-owned sector investment fund, the National IC Industry Investment Fund (“The Big Fund”). We see a continuous flow of funding and talents to support foundries, fabless and other semiconductor companies in China.
Japan’s strengths in semiconductors are in raw materials, equipment, and Integrated Device Manufacturer(IDM). In upstream semiconductor materials, companies like Shin-Etsu and HOYA are global leaders. Tokyo Electron is one of the top three semiconductor equipment makers globally. Sony remains a leader in image sensor technology.