Semiconductor Business in the 4th Industrial Revolution Era

By Young (Hwa) Kwon

Recently, the semiconductor industry in Korea has been gaining global attention. In the past, it was difficult for Korea to start semiconductor businesses, which was almost barren. Up until 40 years ago, almost all conditions, including the necessary manpower, experience and industrial ecosystem as well as technology, to do a semiconductor business were at their worst. Nevertheless, as a result of many people\'s bloody efforts, Korea has now emerged as one of the top powerhouses in memory semiconductors. It\'s really amazing and I can say it\'s almost a miracle. I think this is a good example not only for many countries, but also for many companies, and this is the reason why many people are interested in learning the success stories of Korean semiconductor industry. However, Korea is still not the best power in the semiconductor industry. This is because the market for system semiconductors is about twice as large as that of memory semiconductors, and Korea is still very weak in this sector. The memory semiconductor sector was able to grow significantly thanks to bold investments and bleeding efforts by large companies, but many companies have been negligent in the system semiconductor sector due to various reasons.
Moreover, with various support from the Chinese government, Chinese semiconductor companies are not only growing brilliantly, but also pose a great threat to Korean semiconductor companies. This is because China is growing rapidly in the system semiconductor field and they are gradually speeding up their pursuit in the memory semiconductor field. What\'s fortunate is that Korea has recently been gradually continuing the growth in the system semiconductor sector. Of course, there is still a long way to go, but if we can concentrate on our efforts just like the memory semiconductor field, I believe that the system semiconductor sector will have a bright future.
We are now facing a turbulent era called the 4th Industrial Revolution. Therefore, much of our lives are expected to be very different from what we have been doing. And as the 4th industrial revolution progresses slowly, the demand for semiconductors is gradually growing. For example, new markets are opening up little by little such as AI (Artificial Intelligence), IoT (Internet of Things), Autonomous car, and Smart industry.
Therefore, it can be said that the outlook for the semiconductor industry is brighter than ever. Furthermore, it is hard to expect the development of the 4th industry without the continuous development of semiconductor technology. As such, semiconductor technology can be said to be an essential driving force to lead 4th industry.
Korean economy is now heavily dependent on the semiconductor industry. Since the semiconductor industry accounts for about 20% of the Korean economy, Korean economy is difficult without the growth of the semiconductor industry. Therefore, the government has recently set up various support policies to foster the semiconductor industry.
The main characteristic of the semiconductor market these days is that capital is gradually playing an important role in the growth of companies. This is because it creates competitiveness in the market depending on how much capital can be invested in scaling technology ahead of other companies. But the problem is that the cost of investment in scaling technology is increasing astronomically.
As a result, companies with capital will invest more capital in scaling technology to gain a market leadership as well as competitiveness, while companies with no capital will be forced to flee the market further. In addition, it tends to increase in the number of companies that is acquired, or go bankrupt by other companies with capital.
Meanwhile, most of the existing semiconductor related books focused on
technology. I think that it has resulted in people staying away from the semiconductor industry. In fact, for ordinary people who know little about semiconductors, semiconductor technology

• Language: English
• Publisher: Knowledge Platform
• Release date: Nov 22, 2021
• ISBN: 9791188910649

Book preview

Semiconductor Business

in the 4th Industrial Revolution Era

by

Young (Hwa) Kwon

Prologue

Recently, the semiconductor industry in Korea has been gaining global attention. In the past, it was difficult for Korea to start semiconductor businesses, which was almost barren. Up until 40 years ago, almost all conditions, including the necessary manpower, experience and industrial ecosystem as well as technology, to do a semiconductor business were at their worst. Nevertheless, as a result of many people’s bloody efforts, Korea has now emerged as one of the top powerhouses in memory semiconductors. It’s really amazing and I can say it’s almost a miracle. I think this is a good example not only for many countries, but also for many companies, and this is the reason why many people are interested in learning the success stories of Korean semiconductor industry. However, Korea is still not the best power in the semiconductor industry. This is because the market for system semiconductors is about twice as large as that of memory semiconductors, and Korea is still very weak in this sector. The memory semiconductor sector was able to grow significantly thanks to bold investments and bleeding efforts by large companies, but many companies have been negligent in the system semiconductor sector due to various reasons.

Moreover, with various support from the Chinese government, Chinese semiconductor companies are not only growing brilliantly, but also pose a great threat to Korean semiconductor companies. This is because China is growing rapidly in the system semiconductor field and they are gradually speeding up their pursuit in the memory semiconductor field. What’s fortunate is that Korea has recently been gradually continuing the growth in the system semiconductor sector. Of course, there is still a long way to go, but if we can concentrate on our efforts just like the memory semiconductor field, I believe that the system semiconductor sector will have a bright future.

We are now facing a turbulent era called the 4th Industrial Revolution. Therefore, much of our lives are expected to be very different from what we have been doing. And as the 4th industrial revolution progresses slowly, the demand for semiconductors is gradually growing. For example, new markets are opening up little by little such as AI (Artificial Intelligence), IoT (Internet of Things), Autonomous car, and Smart industry.

Therefore, it can be said that the outlook for the semiconductor industry is brighter than ever. Furthermore, it is hard to expect the development of the 4th industry without the continuous development of semiconductor technology. As such, semiconductor technology can be said to be an essential driving force to lead 4th industry.

Korean economy is now heavily dependent on the semiconductor industry. Since the semiconductor industry accounts for about 20% of the Korean economy, Korean economy is difficult without the growth of the semiconductor industry. Therefore, the government has recently set up various support policies to foster the semiconductor industry.

The main characteristic of the semiconductor market these days is that capital is gradually playing an important role in the growth of companies. This is because it creates competitiveness in the market depending on how much capital can be invested in scaling technology ahead of other companies. But the problem is that the cost of investment in scaling technology is increasing astronomically.

As a result, companies with capital will invest more capital in scaling technology to gain a market leadership as well as competitiveness, while companies with no capital will be forced to flee the market further. In addition, it tends to increase in the number of companies that is acquired, or go bankrupt by other companies with capital.

Meanwhile, most of the existing semiconductor related books focused on technology. I think that it has resulted in people staying away from the semiconductor industry. In fact, for ordinary people who know little about semiconductors, semiconductor technology has many parts that are difficult to understand from the terminology itself. Therefore, this book tried to explain the contents as easy as possible by excluding technical fields, so that even ordinary people could easily understand the industry.

Of course, technology is an important part of the semiconductor industry because technology development is leading the industry, but a business is also a factor that cannot be ignored. No matter how good the technology is, the semiconductor industry cannot be maintained unless the transaction is made as a business. Therefore, this book tried not to focus on technology, but to look at the semiconductor market thoroughly from a business perspective. For reference, I worked for a semiconductor related company for about 10 years in the past and received a doctorate in a semiconductor business. I also published 20 papers on a semiconductor business. In this process, I was able to gain deep knowledge about a semiconductor business. However, I wrote the book with the thought that publishing a book would give more people a chance to read because there was a limit as a paper. Therefore, the contents of the book were organized based on the business status of major semiconductor companies and the overall situation of the semiconductor industry.

I hope that it will help employees in the semiconductor field, students studying in the semiconductor field, and people interested in the semiconductor field understand the semiconductor business.

Finally, in the appendix, 2 interviews were conducted. I think readers will be able to feel the vivid voices of the site in the semiconductor business because it was conducted targeting people who are working in the field of the semiconductor industry.

Sep. 01, 2021

Young (hwa) Kwon

Table of Contents

Prologue

Chapter 1. Semiconductor business overview

1. A current status of semiconductor business

2. Semiconductor business type

3. The status of semiconductor business by country

4. Correlation between scaling and professional companies in a semiconductor business

Chapter 2. IDM company

1. Samsung Semiconductor

2. Intel

3. SK hynix

4. Micron Technology

Chapter 3. Fabless company

1. Broadcom

2. Qualcomm

3. NVIDIA

4. MediaTek

5. AMD (Advanced Micro Devices)

Chapter 4. Foundry company

1. TSMC (Taiwan Semiconductor Manufacturing Company)

2. Samsung Foundry

3. GlobalFoundries

4. UMC (United Microelectronics Corporation)

Chapter 5. OSAT (Outsourced Semiconductor Assembly & Test) company

1. ASE (Advanced Semiconductor Engineering)

2. Amkor Technology

3. JCET (Jiangsu Changjiang Electronics Tech)

Chapter 6. Other semiconductor related companies

1. IP (Intellectual Property) company

2. Design House

3. EDA (Electronic Design Automation) company

4. Semiconductor equipment company

5. Semiconductor material and component companies

6. Semiconductor trading company

Chapter 7. New emerging markets in the 4th industrial revolution

1. Autonomous car market

2. 5G (5Generation Mobile Communication) market

3. IoT (Internet of Things) market

4. AI (Artificial Intelligence) semiconductor market

Chapter 8. Recent issues in semiconductor business

1. What level is it for Chinese semiconductor companies?

2. What will be happened to the competition between TSMC and Samsung Foundry in the future?

3. How can Intel overcome the current crisis?

Epilogue

Appendix: Field Interviews

Chapter 1.

Semiconductor Business Overview

It has been since 1983 that large companies in Korea have begun to enter a memory semiconductor business. At that time, semiconductor companies in the U.S. and Japan occupied most of the market. From then on, Korean companies recognized the importance of the semiconductor industry and started a business in earnest. Although all the conditions in Korea were poor to start the semiconductor business, they began to gradually secure a position in the market.

Originally, the semiconductor industry was started in the United States. Until the early 1980’s, U.S. semiconductor companies dominated the market, but as they gradually lost ground to Japanese semiconductor companies, Japanese semiconductor companies dominated the market from the late 1980’s to the early 1990’s. Since the early 1990’s, Korean semiconductor companies have begun to show their presence in the global market.

Now, the United States is leading the semiconductor market in many areas, and Japan has lost their presence in the semiconductor market. On the other hand, Korea has established a position as a top player in the memory semiconductor market, but China is emerging as a new powerhouse.

Semiconductors are the main driving force for the 4th industry. In other words, without semiconductor technology, it will be impossible in the development of the 4th industry. Therefore, the outlook for a semiconductor business is very bright in the future due to the development of the 4th industry.

1. A current status of semiconductor business

Semiconductor business has no borders. Therefore, instead of being able to sell any semiconductor product to the world, competition among companies is very fierce. And semiconductor business is a continuous growth industry in the long run although it fluctuates according to the boom and recession. This is because new applications continue to emerge. And the most important part of the success in the semiconductor business is technology. However, no matter how technologically strong they are, if they fail to read the market trends well, they could suffer huge losses, let alone a growth. Therefore, it is only possible to achieve results in the business by seeing trends in the market based on the technology capability.

Semiconductors can be divided into memory semiconductors and system semiconductors. Memory semiconductors are the ones that are mainly used for storage, and system semiconductors are the ones which are other than memory semiconductors. The market size of the system semiconductor is more than twice that of the memory semiconductor. And the structure of system semiconductors is more complicated than that of memory semiconductors, which requires higher technology.

Comparison between memory semiconductors and system semiconductors

table_001

Although Korea is a strong player in a memory semiconductor field, they are also an underdog in a system semiconductor field. Therefore, in order to truly become a powerhouse in the semiconductor market, the scale of a system semiconductor business must be expanded. For this reason, Samsung Semiconductor recently declared their vision to expand a system semiconductor business. Although memory semiconductors are relatively simpler to design than system semiconductors, they generally require a lot of capital. And since they are usually produced on a large scale, it is an easy business to proceed with in a large company. However, system semiconductors are suitable business for small and medium-sized companies because they focus on a small volume production of many varieties (Of course, many fabless companies have recently expanded to a large scale). And memory semiconductor businesses are usually done by IDM companies (Of course, there are fabless companies that specialize in designing memory semiconductors, but there