Korea's chips used to be a major supplier to China, with Samsung and SK Hynix memory modules and flash memory everywhere in Chinese factories. But now, the situation has changed, as China's own chip industry has risen, making Korean products less competitive.

In 2024, the share of South Korea's semiconductor exports to China dropped sharply, from 40.2% to 33.3%, while Hong Kong also fell from 20.9% to 18.4%. The combined share of mainland China and Hong Kong in South Korea's exports decreased from 61.6% in 2020 to 51.7%.

In February 2025, South Korea's exports to China plummeted by 31.8%, which was even steeper than the 22.5% decline in January.

In short, China's self-sufficiency in semiconductors is increasing.

In 2014, China's self-sufficiency rate was only 14%, but it rose to 23% by 2023. According to TechInsights in Canada, China's self-sufficiency rate could reach 27% by 2027. Over this decade, it increased by 10 percentage points, with the government investing heavily through the "14th Five-Year Plan" and the Chip Big Fund, leading to a surge in laboratories and factories.

The R&D spending of top enterprises accounts for 15% of their revenue, compared to an average of 5% in South Korea.

According to a 2024 report by the Korea Institute of Science and Technology Evaluation and Planning, based on scores from 39 experts, China surpassed South Korea in four key areas.

Looking at the data, high integration storage chips: 94.1% vs. 90.9%; low-power AI chips: 88.3% vs. 84.1%; power semiconductors: 79.8% vs. 67.5%; next-generation high-performance sensing: 83.9% vs. 81.3%.

China not only caught up, but also started to lead in some specific areas.

China's large market is something South Korea can't match. With 1.4 billion people, smart cars and AI servers are everywhere, and when domestic demand increases, domestic products naturally rise.

In 2024, China's semiconductor equipment expenditure doubled compared to 2022, and many were resolved independently despite foreign supply constraints.

Deloitte's 2025 Economic Outlook for China stated that among the 11 major semiconductor equipment companies listed on the A-share market, R&D expenses increased by 50% in the first three quarters of the year, accounting for 14% of revenue. It is expected that the self-sufficiency rate of equipment will reach 35% in 2025. If equipment can be produced independently, chip design and production will naturally follow suit.

In contrast, South Korea has shifted its exports to Vietnam (35.6%) and the United States (26.5%), but these cannot compensate for the loss of the huge Chinese market. South Korea's intermediate product exports to China account for 85.9%, but now the supply chain is broken, and with the US-China tariff barriers, South Korea is caught in the middle and struggling.

Talent is another pain point for South Korea. Chinese companies are actively poaching talent, with 35% of engineers at Changxin Memory being from South Korea. Key personnel from Samsung and SK Hynix have left en masse.

Due to South Korea's low birth rate, there is already a shortage of engineers, and job fairs have seen very few resumes. The Korean Semiconductor Industry Association predicts that by 2031, there will be a shortage of 54,000 engineers, which is 30 times that of 2022.

Through the "Thousand Talents Plan," China has been recruiting global talent, and Koreans have become highly sought after. Korean media, the Asia Daily, had earlier warned that core human resources were flowing to China, signaling red lights in the industry.

In January 2025, the Chosun Ilbo reported that Chinese companies were setting up research centers in South Korea to recruit talent, forcing South Korean companies to increase salaries to retain employees and calling on the government to impose strict regulations.

In March 2025, Reuters reported that the South Korean government allocated $34 billion in policy funds to help semiconductor and automotive companies withstand global competition and trade barriers. The focus is on retaining talent, improving benefits for senior engineers, and preventing further deterioration.

After President Yoon Suk-yeol took office in 2022, he introduced the "Semiconductor Talent Development Plan," established new departments, and expanded student enrollment. The Ministry of Education last year added more funding. However, the industry in South Korea says that technical advantages are shrinking, investment competitiveness is weak, the design sector is weak, and regulations are too strict.

These issues cannot be solved simply by throwing money at them; they need to be addressed at the root. South Korea's political situation is chaotic, and the martial law incident in December 2024 led to Yoon Suk-yeol being impeached and suspended, affecting the semiconductor industry, adding to the challenges caused by political factors.

From a broader perspective, the Sino-US chip war has placed South Korea at the center of the storm.

After Trump took office in March 2025, the United States intensified export controls, placing a large number of Chinese companies on the blacklist, forcing South Korean companies to take sides.

South Korea's exports to China hit a nine-year low, with semiconductor exports to China falling by 23.5% in the first quarter of 2025, from 17.94 billion USD to 13.73 billion. Professor Kim of Sogang University analyzed that the US-China tariff disconnection broke the "South Korean intermediate goods - Chinese processing - US final products" model.

South Korea's semiconductor exports totaled 141.9 billion USD in 2024, rising by 43.9% due to AI demand, but reliance on China decreased, and the overall structure is being restructured. China's share of imports from the United States is only 3%, and domestic substitution is accelerating.

NVIDIA's share of the Chinese AI chip market dropped from 66% in 2024 to 54% in 2025, with Chinese domestic products taking over.

China's path in semiconductors is correct, emphasizing independent control, not just investing money but also building an ecosystem. In 2024, Chinese memory manufacturers caught up with global leaders, reducing the gap.

China now surpasses South Korea in basic capabilities and design technology. Although memory fields were traditionally strong in South Korea, China has now taken the lead across the board. With the global semiconductor restructuring, China's self-sufficiency is impacting South Korea's exports, posing significant geopolitical risks.

South Korea's exports may continue to be squeezed out of the Chinese market, and with tighter US controls, South Korean companies will have to restructure.

This serves as a warning for South Korea. Semiconductors are a pillar industry, accounting for more than 20% of exports. If talent loss is not stopped, the industry will be in danger. South Korea needs to learn from China, increase local training, loosen regulations, and not rely solely on government funds.

In 2025, the "South Korea semiconductor crisis" theory continues to circulate, stating that South Korea is behind China in all areas. China no longer needs South Korean chips, not overnight, but through ten years of effort.

References:

1. Storage chip prices have reached a peak, Chinese mobile phones no longer buy, South Korean chips may face internal conflicts, hype has failed. Sina Finance, September 22, 2024

2. Chip exports are sluggish, talent is being poached by the US and Japan, "South Korea is on red alert." Observer Network, March 25, 2024

Original article: https://www.toutiao.com/article/7556256393599222324/

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