China's Semiconductor Industry Poised to Overtake South Korea by 2030

The South Korean semiconductor industry is facing a warning sign as Chinese memory companies accelerate their technological advancements in both DRAM and NAND flash markets. While Samsung Electronics and SK Hynix maintain their dominance in the advanced memory sector, the aggressive push backed by substantial government support and a vast domestic market in China is intensifying. Projections suggest that by 2030, China's semiconductor competitiveness could surpass that of South Korea.

According to a survey conducted by the Korean Economic Association last year involving 200 major export companies, China's semiconductor competitiveness is expected to rise from 99.3 last year to 107.1 by 2030, with South Korea's competitiveness set at 100. This indicates a potential reversal of competitive advantage within just five years. The survey also revealed that all ten major export sectors of South Korea, including displays, shipbuilding, and electronics, are likely to fall behind China.

This outlook is closely related to the recent activities of Chinese memory firms. Changxin Memory Technologies (CXMT), a Chinese DRAM manufacturer, is pushing to apply its '4F²' technology, which reduces cell area by 33% for next-generation server DRAM, with plans for mass production this year. While Samsung and SK Hynix are also researching similar technologies, they have not yet set a timeline for commercialization.

It remains uncertain whether CXMT can secure stable production yields. However, if successful, the impact on the market could be significant. With increased investment in AI data centers leading to ongoing supply shortages in the memory market, a rise in Chinese DRAM supply could expedite the resolution of supply-demand imbalances, potentially ending the memory boom for Samsung and SK Hynix sooner than expected.

CXMT is also expanding its collaborations with major Chinese tech companies. Reports indicate that it recently signed a long-term supply contract for server DRAM worth over 20 billion yuan (approximately $4.1 billion) with Tencent. Other key clients include Alibaba Cloud, ByteDance, Lenovo, and Xiaomi, allowing CXMT to secure stable sales channels and gain product validation experience based on its large domestic market.

The company is gradually broadening its memory business scope, with plans to establish a NAND research and development production line at its new factory in Beijing. Conversely, Yangtze Memory Technologies Co. (YMTC), a Chinese NAND manufacturer, is supplying low-power DRAM samples to customers as it considers entering the market. This indicates that the two major Chinese memory firms, which previously focused on separate areas, are now eyeing each other's domains.

In the NAND market, China's pursuit is already becoming evident. According to market research firm Counterpoint Research, YMTC's global NAND shipment market share reached 16.5% in the second quarter of this year, making it the third-largest player after Samsung and SK Hynix. Despite U.S. semiconductor equipment export restrictions, YMTC is enhancing its production competitiveness with its proprietary stacking technology, 'Xtacking.'

YMTC is targeting not only NAND for smartphones and PCs but also the enterprise solid-state drive (SSD) market for AI data centers. In August, it applied for a listing on the Shanghai Stock Exchange, seeking to raise approximately 33 billion yuan (about $7 billion) for expanding production facilities and research and development.

The increasing threat from China is largely due to extensive government support. The Chinese government is backing the growth of companies through substantial subsidies and increased domestic semiconductor purchases. Even if their yield and cost competitiveness currently lag behind South Korean firms, this structure allows them to continue production and sales while improving their technological capabilities.

Recently, Li Lecheng, a former minister of the Ministry of Industry and Information Technology, visited CXMT and emphasized the semiconductor industry as a strategic sector directly linked to national security, highlighting the need for comprehensive support. The Chinese government plans to foster advanced semiconductor technologies and related industrial supply chains through its 15th Five-Year Plan (2026-2030).

However, a technology gap of at least 2-3 years still exists. CXMT must prove the production yield of next-generation DRAM, while YMTC needs to focus on increasing the proportion of high-value products and securing global clients. Samsung and SK Hynix are also committed to maintaining their technological edge by developing advanced memory technologies such as high-bandwidth memory (HBM).

The prevailing outlook is that China's pursuit will accelerate further. If Chinese companies expand their supply of general-purpose memory based on their substantial financial resources and domestic market, it will inevitably pressure the market dominance and profitability of South Korean firms. Concerns have been raised that rather than a short-term technological reversal, the continuous expansion of China's production capacity could alter the dynamics of the global memory market.