South Korea’s efforts to increase the share of domestically produced equipment for semiconductors and panels are beginning to yield results.

Originally dominated by U.S. and Japanese manufacturers, South Korea’s semiconductor equipment market has gradually shown promising results thanks to the country’s vigorous efforts to promote domestic production, and is starting to replace imported products. Recently, mainland China has begun to foster its own semiconductor industry, creating favorable prospects for South Korean semiconductor equipment suppliers to export to and enter the Chinese market. According to a report by DigitalTimes, South Korean semiconductor giant SK Hynix has become a new customer of KCTech, purchasing chemical-mechanical polishing (CMP) equipment. KCTech is currently a CMP equipment supplier for Samsung Electronics, and now it has also secured an order from SK Hynix—furthermore,

According to a report by Digital Times, South Korean semiconductor giant SK Hynix has become a new customer of KC Tech, purchasing chemical-mechanical polishing (CMP) equipment. KC Tech is a supplier of CMP equipment to Samsung Electronics, and now that it has secured an order from SK Hynix, in addition to expanding its revenue, it will also be able to increase its market share in South Korea.

Since successfully localizing CMP equipment in 2014, KC Tech has captured approximately 10% of the Korean market. Initially, U.S.-based Applied Materials and Japan’s Ebara each held more than 60% and 20% of the market share, respectively. However, after KC Tech began producing its own equipment, it quickly boosted its market share. Although KC Tech’s equipment has not yet been exported to overseas markets, Chinese companies are eagerly investing in 3D NAND Flash, which significantly increases the likelihood of KC Tech securing orders.

Core semiconductor equipment, which South Korea previously relied heavily on imports for, is now being rapidly localized. According to statistics from the Korea Semiconductor Industry Association, in 1993, the domestic production ratio of South Korean semiconductor equipment was only 8%; by 2007, this figure had risen to 20%, and by 2015 it had reached approximately 30%. In the past, South Korean semiconductor companies were highly dependent on expensive imported equipment. Following localization, they can now save on equipment procurement costs and reduce their reliance on imports.

Etching equipment, with market shares held by Lam Research of the U.S., Tokyo Electron of Japan, and Applied Materials at 50%, 30%, and 10% respectively, has also seen strong performance from Korean players. In 2015, Semes, a subsidiary of Samsung, generated revenues of 1 trillion Korean won (approximately 850 million U.S. dollars), with etching equipment accounting for more than 10% of its total revenue. In 2016, in addition to its core wafer-cleaning equipment, Semes plans to further increase the share of revenue contributed by etching equipment.

Following its success in developing DRAM testing equipment, semiconductor inspection equipment manufacturer Exicon once again achieved domestic production of solid-state drive (SSD) testing equipment in 2015. Currently, it is the sole domestic supplier of such equipment to Samsung. In the semiconductor inspection equipment market, the share of domestically produced equipment stands at approximately 25%; however, Korean manufacturers continue to improve the quality of their equipment, and their market share is on a rising trend.

Display equipment manufacturer Sunic System has successfully localized the production of OLED evaporation equipment. Previously, the South Korean market for such equipment was dominated exclusively by the Japanese firm Canon Tokki. Starting in 2016, Sunic System will begin supplying equipment to LG Display. In the past, LG Display relied entirely on Canon Tokki’s OLED evaporation equipment; however, it is expected that by the first half of 2017, when LG Display’s new flexible panel production line goes online, the proportion of domestically produced Korean equipment used will rise to 50%.

Industry insiders in South Korea explained that equipment manufactured by Korean manufacturers still lags behind imported products in terms of product maturity and quality, underscoring the need for continued collaboration between the government and private enterprises to advance technological research and development. Etching and CMP equipment, which were once dominated or monopolized by foreign companies, are now gradually being replaced by domestically produced Korean equipment, a development that is expected to enhance technological competitiveness and boost revenue.

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