South Korea’s semiconductor industry is of huge importance to the national economy, yet continues to show growing reliance on raw materials from China, according to published This week, a study by the Export-Import Bank of Korea.
At least, the 2022 data show that South Korea’s dependence on China for silicon supplies has grown from 68.8 to 75.4%, for rare earth metals from 59.6 to 61.7%, for tungsten from 68.2 to 68.6%, for germanium from 56.9 to 74.3%, and for gallium and indium from 26.5 to 46.7%. There are examples of decreasing dependence: fluorspar, used in the production of hydrofluoric acid, in terms of imports from China to South Korea, reduced its share from 49.9 to 47.5% by the end of 2022. The entire semiconductor industry of South Korea is heavily dependent on imported raw materials, and this is most pronounced in the Chinese direction.
At the same time, in recent years, South Korean memory manufacturers have been in no hurry to move their factories out of China, as they managed to obtain some concessions during negotiations with the US authorities. Accordingly, Samsung Electronics produced about 36% of all NAND memory at its plant in Xi’an, China, by the end of 2022, and last year increased its share to 37%. The Chinese SK hynix plant in Wuxi provided 49% of all DRAM chip production in 2021, but last year the share was reduced to 42%, although this year it will still remain above 40%. However, the ban on investment in Chinese enterprises has significantly reduced the flow of capital from South Korea, as noted in the report.
Experts also explain that in order to effectively reduce South Korean industry’s dependence on China, it is necessary to implement information systems that would allow for prompt tracking of changes, as well as better coordination of national industrial policy with the country’s security interests.
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