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By Baek Byung-yeul
Korea's semiconductor industry outperformed expectations in 2020 despite the volatile market conditions caused by the COVID-19 pandemic as the non-face-to-face trend increased the demand for chips.
Industry analysts forecasted Samsung Electronics, SK hynix and smaller foundry companies will show better performances in 2021 as chip demand from various sectors including smartphones, servers and other IT devices will be on the rise.
Korea Trade-Investment Promotion Agency (KOTRA) recently announced the global chip industry will enter a bullish super-cycle and thanks to the upward trend, Korea's exports this year will be increased by 6 percent to 7 percent compared to 2020.
Market researcher Omdia also estimated this year's global DRAM market will see a 23.8 percent increase year-on-year while the NAND flash chips market will be increased by 13.4 percent from a year earlier.
"The semiconductor industry is expected to see a super-cycle thanks to a recovery in demand, rising unit costs, the expansion of fifth-generation (5G) networks and acceleration of digitization," the trade agency said.
The country's chip industry will also be likely to perform better this year as China's grip on the chip industry is expected to be weakened due to the U.S. government's continued sanctions on Chinese companies.
In December, the U.S. Commerce Department blacklisted dozens of Chinese tech firms including the largest chipmaker SMIC, calling them a security threat.
SMIC is China's largest semiconductor foundry company and produces chips for numerous Chinese IT firms including Huawei. Due to the blacklisting, SMIC has been prevented from accessing technology to produce semiconductors at the advanced level of 10-nanometer or smaller.
The smartphone business, which accounts for the largest part of the memory chip business, will be a strong reinforcement to leading memory chip makers Samsung and SK.
In 2020 the smartphone market decreased by 11 percent compared with 2019 due to the virus impact which led to supply chain disruptions, but it is expected to recover this year. Market analysts forecasted this year's market will increase by 13 percent year-on-year.
Though Huawei, which has been one of the largest customers to Samsung and SK, will struggle due to Washington's continued sanctions, the demand for smartphone memory chips will be increased thanks to the proliferation of 5G network-enabled phones, and Chinese phone makers such as Vivo, Oppo and Xiaomi are expected to buy more chips from the Korean chip makers to fill the void left by Huawei.
Also, small foundry companies such as DB HiTek are expected to enjoy soaring demand for producing analog chips, which are used to measure temperature, heart rate and light, as more Internet of Things (IoT) devices will be sold this year.
Kim Kyung-min, an analyst at Hana Financial Investment, estimated that DB HiTek will continue to operate its foundry lines at full capacity this year.
"As foundry supply has been tight, DB HiTek's production capacity has remained at almost 100 percent during this winter, which was usually the off-season for the chip industry. This trend will continue at least throughout 2021," the analyst said.
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