Korea must participate in the Chip 4 Alliance led by the United States to ensure a stable supply of semiconductor production equipment, a report from the Korea International Trade Association (KITA) says, noting that Korea’s semiconductor equipment localization rate stands at a mere 20 percent.
According to the report, Korea depends on the United States, Japan and the Netherlands for 77.5 percent of its demand for chip production equipment.
The world’s largest semiconductor equipment importing country in 2021 was China with US$38.6 billion, followed by Taiwan with US$29.8 billion and Korea with US$25 billion. The world’s five largest semiconductor equipment producers — Applied Materials (the United States), ASML (the Netherlands), Lam Research (the United States), Tokyo Electron (Japan), and KLA (the United States) –- racked up combined sales of US$20.3 billion in the Korean market. The figure represented an 81.3 percent share of the Korean market.
The world’s largest semiconductor equipment exporting country in 2021 was Japan with US$31.2 billion, followed by the United States with US$28.4 billion and the Netherlands with US$20.1 billion.
The KITA report points out that Korean chipmakers rely heavily on the top five equipment producers, which makes them vulnerable to diplomatic and geopolitical risks.
As it is difficult to localize semiconductor equipment or diversify import sources in a short period of time, Korea needs to participate in the Chip 4 Alliance, the report said, adding that Korea also needs to invest in research and development (R&D) for equipment localization. “We must announce our intention to join the Chip 4 Alliance,” the report said.