• US semiconductor leadership faces new competitive landscape as Chinese capabilities advance beyond South Korea in important sectors
• Despite export controls, Beijing’s “whole nation” approach delivers significant technological progress, particularly in memory chips

According to a report released by the Korea Institute of Science and Technology Evaluation and Planning (KISTEP), US semiconductor leadership will face continued pressure from China as it surpasses South Korea in foundational capabilities in multiple chip technologies.

The South Korean think tank’s analysis reveals a competitive landscape that could have significant implications for the American and European technology industries.

Global semiconductor hierarchy shifts as China advances

The KISTEP report surveyed 39 South Korean semiconductor experts in 2024, and documents an evolution in the global chip ecosystem. While the United States (US) maintains its top position in most semiconductor sectors, China has now claimed the second spot in memory chip technologies, overtaking South Korea’s Samsung Electronics and SK Hynix, two companies that have traditionally dominated the space.

The new rankings represent a significant change from KISTEP’s 2022 assessment, when South Korea ranked second behind the US in memory and advanced packaging technologies. In the earlier report, China ranked third and fourth in these areas, respectively.

The detailed 2024 evaluation shows China’s high-density resistive memory technology scoring 94.1% (with 100% representing the highest level), compared to South Korea’s 90.9%. China’s advance is particularly notable given that memory technology has historically been South Korea’s most substantial semiconductor sector and an integral component in computing, mobile devices, and data centres that power technology infrastructure.

Western export controls face a test as Chinese capabilities expand

The advance of China’s semiconductor capabilities comes despite extensive US-led export restrictions designed to limit access to chips and chip-making technologies. The KISTEP report serves, therefore as an important data point in judging the effectiveness of trade controls, which have become such an important element of recent Western technology policies.

In the latest figures, China out-performs South Korea as follows:

• China: 88.3% in high-performance and low-power AI semiconductor technology, South Korea: 84.1%.
• China: 79.8% for power semiconductors, South Korea 67.5%.
• China: 83.9% in next-generation sensing technology, South Korea 81.3%.

The two countries achieved parity only in advanced packaging technology, with both scoring 74.2% in those foundational capabilities.

Taiwan leads in semiconductor advanced packaging technology commercialisation, while the US maintains dominance across other technology sectors in foundational capabilities and commercialisation.

“Even in the memory market, where Korea had maintained its unrivalled status, Chinese semiconductor companies are increasing their market share,” the KISTEP report states, adding that China is ramping up production of legacy chips “with little technology gap” compared to industry leaders.

US semiconductor leadership vs. China’s “whole nation” approach

The KISTEP report also evaluated the semiconductor technology lifecycle, noting that South Korea retains advantages in process and mass production while China excels in foundational capabilities and design.

Chinese memory manufacturers have been making significant strides in narrowing technology gaps with global industry leaders. ChangXin Memory Technologies (CXMT), a Chinese producer of dynamic random access memory (DRAM) chips, has developed consumer-grade chips using 16-nanometre processing technology. While still behind the 12-nm and 14-nm nodes used by Samsung, SK Hynix, and US-based Micron Technology in DDR5 memory production, this achievement represents progress in closing the technological divide.

Beijing has implemented what observers describe as a “whole nation” approach to achieving semiconductor self-sufficiency, including establishing the country’s largest-ever chip investment fund last year. The coordinated strategy contrasts with the more market-driven approach traditionally favoured in Western economies, raising questions about optimal models for maintaining US semiconductor leadership in the long term.

Geopolitical and economic implications for Western tech industries

The advance of Chinese semiconductor capabilities holds implications for Western technology companies and policymakers. The report highlights concerns regarding the impact of geopolitical tensions on global semiconductor supply chains, including “the risk of Korea’s exports falling or being forced out of the Chinese market due to US export controls.”

For Western companies reliant on advanced chips for everything from smartphones to cloud computing services, emerging developments could eventually impact the availability and pricing of important components. While US-based companies like Intel, Nvidia, and AMD maintain leadership positions in their respective niches, the changing landscape of the memory technologies market shows a shift in geographical leadership.

The report identifies several factors that have contributed to the change, including talent migration, intensified competition in AI semiconductor technology, domestically focused policies, and rapid shifts in supply chains. As China’s semiconductor industry continues to develop, particularly in memory technologies (an area in which it’s lagged, traditionally), the global market is undergoing significant realignment.

Despite export controls and other restrictions, China is making substantial progress toward technological self-reliance. For US semiconductor leadership to be maintained, Western policymakers and industry leaders must evaluate whether current investment, research, and international collaborations are enough to address the evolving competitive landscape, or whether a sea-change in approach is required.

The KISTEP report highlights that competition in the sector is intensifying, with potentially far-reaching and long-term consequences for Western technological, political, and economic interests.