[Edaily SOYEON KIM Reporter Kim Hyung-wook] “A professor from Peking University in China persistently asked questions and probed deeply into ‘hybrid bonding’ technology. He was very proactive.”

Professor Yoo Hoe-jun of the Department of Electrical and Electronic Engineering at KAIST, widely regarded as one of Korea’s leading semiconductor experts, said he was taken aback when he met several Chinese officials at the VLSI Symposium held in Kyoto, Japan, last June. This was because he could personally sense their determination to advance in the semiconductor industry from the barrage of questions they posed. Professor Yoo said, “I feel that China has now taken the position that it intends to manufacture high-value-added products (currently led by South Korea, the U.S., and Taiwan),” adding, “This is clear evidence that the day China catches up in the memory sector is not far off.”

◇Semiconductor Industry: “It’s Difficult to Keep Up with China’s Pace of Development”

As Chinese industries have successively overtaken South Korea, warnings are growing that even the so-called “semiconductor, auto, and biotech” sectors—considered the last bastion of South Korean industrial strength—are facing structural challenges. This is because China is closing in rapidly in terms of technological capability, market share, and supply chains. Rather than simply following the existing competitive landscape, China is rapidly expanding its influence through a “leapfrog” strategy—rebuilding the industrial ecosystem from scratch.

Semiconductors are a prime example. Backed by astronomical government support, China is accelerating its push toward “self-reliance” by simultaneously growing the entire ecosystem—from fabless (design-specialized) companies to foundries (contract semiconductor manufacturers), memory, and core equipment. Pursuing all sectors simultaneously to create a new landscape is virtually unprecedented in the history of the semiconductor industry. Currently, the United States (fabless), Taiwan (foundry and fabless), South Korea (memory), and Europe (advanced equipment and design assets) each hold strengths in specific sectors.

According to market research firm Omdia, Changxin Memory (CXMT), whose DRAM market share was only in the 1% range in 2022, raised it to 7.6% in the first quarter of this year. It has now risen to fourth place globally. In the NAND flash market, where numerous companies compete, China’s rise is even more pronounced. Yangtze Memory Technology (YMTC) has increased its market share from 3% in 2022 to 16.2% this year. It is currently ranked third globally. In the foundry market, China’s SMIC (5.1%) is hot on the heels of SamsungElectronics (6.5%). A senior executive in the semiconductor industry stated, “China is undoubtedly the most formidable competitor. It is difficult to keep up with China’s pace.”

China’s pursuit is gaining momentum through the acquisition of talent and technology. There was even a case where a company stole approximately 600 DRAM process technologies in their entirety from a South Korean memory industry professional. Given that there is a precedent of China using such methods to shorten the time required for development and optimization, we cannot rule out the possibility that China could overtake South Korea at any time in high-value-added products such as High Bandwidth Memory (HBM).

◇In Mexico and Brazil, 8 out of 10 electric vehicles are made in China

The same is true for the electric vehicle market. According to the International Energy Agency (IEA) and market research firm EV Volumes, the market share of Chinese electric vehicle manufacturers in emerging markets—excluding the three major markets of China, the U.S., and Europe—surpassed 50% for the first time this year. This is clear evidence that Chinese electric vehicles are no longer “frogs in a well.” In countries such as Israel, Singapore, Thailand, Mexico, Brazil, Indonesia, and Malaysia, the market share of Chinese electric vehicles was found to be around 80%. Judging that competing in the internal combustion engine vehicle market would be difficult, China made a direct leap to electric vehicles and, building on this, is gradually encroaching on the global automotive market.

China is also accelerating the establishment of overseas production bases. Companies such as BYD, Changan, and GWM have embarked on an aggressive campaign to build and acquire local factories, first in Latin America and Southeast Asia, and most recently in Europe. They are, quite literally, building an industrial empire where “the sun never sets.”

The biotech industry is also finding it difficult to escape China’s pursuit. Insilico Medicine, a Chinese AI-driven new drug development company, signed a research and licensing agreement with Eli Lilly this year worth up to $2.75 billion (approximately 3.8 trillion won). The upfront payment alone amounts to $115 million. Combined with previously announced deals—including a contract with Stemline worth up to $550 million and one with Servier worth up to $888 million—the total value of these three major disclosed contracts reaches approximately $4.19 billion. According to JPMorgan, the share of upfront payments attributable to new drug assets developed in China in major licensing agreements signed by global pharmaceutical giants surged from 4% in 2021 to 68% in the first half of this year.

The industry believes that, as with precedents in other sectors, competition with China is inevitable for the semiconductor, automotive, and chemical sectors. The problem is that these sectors account for such a large share of the Korean economy. According to the Bank of Korea, semiconductors contributed 55% to the growth rate in the first quarter of this year. This means that if the semiconductor industry had not achieved record-breaking growth, the growth rate could have been cut in half. According to data from the Ministry of Trade, Industry and Energy, the combined exports of semiconductors, automobiles, and biotechnology accounted for over 50% of total exports in July of this year.

A senior industry official stated, “Semiconductors impact the overall economy in terms of growth rate, automobiles in terms of jobs, and biotech in terms of future growth engines,” adding, “The more the ‘Chinese tsunami’ sweeps in, the more South Korea will fall directly within its sphere of influence.”