Report Warns China’s Chip Expansion Could Squeeze South Korean Profitability

South Korea urged to guard chip profitability as China’s CXMT and YMTC gain market share

South Korea’s semiconductor industry is facing mounting anxiety as China’s expanding chip sector fuels pressure on local chipmakers, according to a new consultancy report.

The report warned that Chinese rivals are scaling up production and strengthening their market share, increasing the need for South Korean companies to defend profitability.

It urged Samsung and SK Hynix to sharpen their cost competitiveness in commodity memory while pursuing cutting-edge sectors.

Chinese competition expected to intensify

Samil PwC, the South Korean member firm of the global consultancy, said in a report made public on Monday that competition from China would likely heat up first in conventional memory, mature-node manufacturing, and packaging and testing.

These areas are expected to face greater competition as China’s semiconductor industry expands its production capacity and market presence.

Focus on memory and advanced packaging

To stay ahead, Samil PwC urged South Korean semiconductor companies to improve cost competitiveness in commodity memory.

At the same time, it called on them to double down on cutting-edge sectors such as advanced packaging and high-bandwidth memory, or HBM.

HBM is used alongside AI processors in a stacked configuration, making it one of the advanced areas highlighted in the report.

The recommendation sets out a two-part response: protect profitability in conventional memory while strengthening positions in newer semiconductor technologies.

Source: South China Morning Post