Must-Know: US Dominates Global Semiconductor Space


Sep. 11 2015, Updated 10:07 a.m. ET

The US leads global semiconductor space

The US semiconductor industry accounted for 51% of the global semiconductor sales in 2014. This industry contributed over $65 billion to the US GDP (gross domestic product) from 1987–2011, according to research firm IHS Technology. However, competition is increasing from South Korea as the country boosts its semiconductor manufacturing capacity.

As seen from the above chart, the US continued to lead with a 52.4% share of the global semiconductor output in 2013. Intel (INTC) and Qualcomm (QCOM) were the largest players in the US semiconductor space. For the first time, South Korea (EWY) overtook Japan (EWJ) to become the second largest semiconductor producer in the world.

According to the Korean Ministry of Trade, Industry, and Energy, South Korea accounted for 16.2% of the global semiconductor output, whereas Japan accounted for 13.7%.

Article continues below advertisement

Korea’s semiconductor industry gains ground

Korea’s growth in the semiconductor space is largely driven by memory products, which constitute ~67% of the country’s overall semiconductor output. Recently, Samsung Electronics (SSNLF) announced plans to invest $14 billion in a new semiconductor facility in South Korea and an additional $9.2 billion in capacity expansion. The Financial Times reported that the South Korean memory chipmaker SK Hynix is also considering investing in a new factory.

In order to remain competitive and sustain growth, South Korea must expand into other semiconductor products. In 2014, South Korea’s government announced a ~$170 million investment in semiconductor research and development.


More From Market Realist