China's semiconductor pursuit is intensifying. ChangXin Memory Technologies (CXMT) is projected to see its third-quarter revenue increase by more than six times compared to the previous year, with a significant shift to profitability anticipated. Yangtze Memory Technologies Co. (YMTC) is enhancing its NAND flash competitiveness with proprietary technology. Chinese companies are threatening South Korea's semiconductor stronghold by simultaneously boosting production capacity and technological prowess, backed by substantial capital and government support.
According to local reports, CXMT's third-quarter revenue is estimated to reach between 114.7 billion and 119.7 billion yuan, approximately $22.9 billion to $23.9 billion. This marks a staggering increase of 589% to 619% year-on-year. While rising memory prices and supply shortages due to the expansion of the AI industry have contributed to this performance, it is also noteworthy that CXMT has improved wafer production and equipment utilization rates through facility expansion and process enhancements. The company is likely to invest its secured funds and profits to narrow the gap with South Korean firms.
The technological race is also accelerating. CXMT is speeding up the development of next-generation DRAM and low-power memory, targeting server products. YMTC is expanding its presence in the high-density 3D NAND flash market by advancing its proprietary stacking technology, known as 'X-Stacking.' Although challenges remain in yield rates, mass production stability, and customer certification for advanced memory, it cannot be guaranteed that the current technological gap will persist. With China's capital strength, domestic market, and policy support converging, the pace of its pursuit is likely to quicken.
However, there is no reason to be pessimistic about the future. The journey of South Korea's semiconductor industry to its current status is a history of overcoming the limitations of latecomers. In the 1980s, South Korean companies invested heavily in facilities and research and development to compete against Japanese firms that dominated the global memory market. Despite being at a technological and capital disadvantage, they continued to invest during economic downturns, betting on next-generation products and production processes. As a result, they surpassed Japan and secured leadership in the global memory market.
Crises have recurred since then. The Asian financial crisis, the global financial crisis, and plummeting memory prices have threatened corporate survival. Japan's export restrictions on semiconductor materials in 2019 exposed vulnerabilities in the supply chain for key materials and equipment. South Korean companies and the government responded by diversifying suppliers, localizing production, and investing in research and development. While not all vulnerabilities have been resolved, external pressures have prompted a reassessment of supply chains and a strengthening of technological independence. SK Hynix's competitiveness in the high-bandwidth memory (HBM) market and Samsung Electronics' focus on next-generation memory development are results of continuous self-improvement.
South Korea should view China's pursuit as an opportunity for a new leap forward. It must maintain a technological edge in HBM and next-generation DRAM while also ensuring cost competitiveness in general-purpose memory. Strengthening advanced packaging and design-manufacturing collaboration, as well as expanding the ecosystem for materials and equipment and nurturing semiconductor talent, are urgent tasks. The government needs to enhance production infrastructure, including power and water supply, and support research and development and workforce training. It should also reduce institutional uncertainties to ensure that bold corporate investments lead to actual technological innovation and productivity improvements.
Underestimating China's growth is risky, but it is also premature to assume that South Korea's competitiveness will collapse solely due to a rival's rise. The South Korean semiconductor industry has accumulated technological expertise, production experience, and a global customer base through numerous crises and challenges. Its ascent to the top of the global semiconductor market was not due to a lack of competition but rather a result of continuously honing its capabilities and surpassing limits whenever strong challengers emerged. It must continue to demonstrate that resilience today.
* This article has been translated by AI.
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