Korea, which is trying to solidify its position as a semiconductor powerhouse in the global semiconductor market led by the US, including Qualcomm and Nvidia, has ranked second in the global market, but is considered to be very weak in the fabless IC sector, raising concerns.

According to market research firm IC Insights on the 6th, the United States dominates the global semiconductor market based on country of headquarters. The US is considered to have a high market share in the fabless sector, which is in line with its share of IDMs.



In terms of sales in 2021, American companies accounted for 54% of the total market share of IDM and fabless IC sectors excluding pure foundries, followed by Korean companies with 22%. Taiwanese companies, fueled by fabless IC sales, accounted for 9% of the total, while European and Japanese companies accounted for 6%. China, however, held a low share of the semiconductor market, accounting for only 4%.

Looking at market share by subcategory, the US holds a significant lead in the fabless sector, with 47% of IDMs and 68% of fabless. IC Insights assessed that "overall, the US has the most balanced market share in the overall semiconductor industry, including IDMs and fabless."

With IDMs accounting for 33% of the market and fabless manufacturing for 1%, Korea, along with Japan (9% IDM and 1% fabless), was assessed as "weak in the fabless IC sector, along with Japan." Taiwan, with IDMs accounting for 3% and fabless manufacturing for 21%, and China, with IDMs accounting for 1% and fabless manufacturing for 9%, both countries were noted to have very low IDM shares.



Looking at trends in semiconductor market share by country, Japan's decline is stark, while Asian countries like Korea and Taiwan have seen remarkable growth. Japanese semiconductor companies, which dominated the global market in the 1990s with a 49% market share, nearly half the market, have fallen to just 6% as of 2021. In contrast, Asian companies have seen a dramatic increase, from 4% to 34%. Europe, meanwhile, is showing a gradual decline, dropping to 6%, while North America has soared to 54%, taking over half the market share.

Taiwan's growth is particularly strong. IC Insights explained that Taiwan surpassed Europe for the first time in semiconductor industry market share in 2020. This increase was largely due to the sales of fabless companies. In Taiwan, where TSMC is a strong player in the foundry industry, even MediaTek, the largest fabless company in Taiwan, has seen growth. MediaTek, which has held the top spot (40%) in the global smartphone AP market for five consecutive quarters, recorded revenue exceeding approximately $17.6 billion in 2021. Similarly, Taiwan-headquartered Novatek and Realtek achieved revenue of approximately $4.8 billion and $3.7 billion, respectively.


TrendForce's 2021 ranking of the world's top 10 fabless companies was dominated by the United States and Taiwan. The U.S. ranked first, followed by Nvidia (second), Broadcom (third), AMD (fifth), Marvell (seventh), and Xilinx (ninth), demonstrating their prowess in the fabless sector. Taiwan's MediaTek (fourth), Novatek (sixth), Realtek (eighth), and Himax (tenth) dominated the rest, solidifying their two-way dominance. On the other hand, Korea did not make it into the top 10 fabless companies in the world.

LX Semicon, Korea's largest fabless semiconductor company, is estimated to have achieved sales of nearly KRW 1.9 trillion (approximately USD 1.5 billion) last year, achieving over 63% year-on-year growth and nearly reaching the top 10. After surpassing KRW 1 trillion in sales in 2020, the company is projecting annual sales in the KRW 2 trillion range, fueled by the semiconductor boom. However, given its core focus on display driver ICs (DDIs), the company faces challenges in improving profitability and developing high-performance chips due to their relatively low unit prices.



The proportion of fabless and system IC sales is expected to increase in the future. The sales proportion of fabless and system ICs, which was only 13% of the entire semiconductor market in 2002, jumped to 32.8% as of 2020, a record high. IC Insights predicted that “the market share that fabless and system IC suppliers will occupy in the long term will remain in the mid-30s for the next five years.” In the overall semiconductor market, fabless companies showed an average annual growth rate of 8% for 10 years from 2010, while IDM companies showed an average annual growth rate of 3%, showing a contrasting growth rate.

There is even talk that there is a need for collaboration between domestic foundries and fabless companies. Taiwan is solidifying its semiconductor supply chain, from design to production, through a coupling between its foundries and fabless companies. Meanwhile, domestic fabless companies, largely small and medium-sized enterprises (SMEs), are facing a further erosion of their foothold in a market where semiconductor demand is skyrocketing, dwarfed by orders from global fabless companies.

Accordingly, Minister of SMEs and Startups Kwon Chil-seung is bolstering the ecosystem for small and medium-sized fabless companies through the support plan for small and medium-sized fabless companies announced last November. Minister Kwon pledged, "We will alleviate the shortage of foundries for small and medium-sized fabless companies through the mutual growth of large and small companies, and provide full-cycle support for small and medium-sized fabless companies, from design to production and sales."

Meanwhile, the semiconductor industry is actively cultivating talent, as fostering growth in the domestic fabless industry begins with securing a skilled workforce. SK Hynix signed a memorandum of understanding with Sogang University to establish a Department of Systems Semiconductor Engineering, while LX Semicon recently established the "LX Semicon Future Research Center" at KAIST to research future semiconductor technologies.