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Analysis findings show that products from two countries have reaped the rewards as Chinese semiconductors have withdrawn from the US market: Taiwan and Vietnam.

Meanwhile, South Korea, which has been building stronger links with the US in semiconductor supply chains, has not benefited greatly from the market shift.

On Tuesday, the Federation of Korean Industries (FKI) shared findings from an analysis of major countries’ shares of the US semiconductor import market between 2018 and 2022 — a period when the US-China trade feud escalated — based on statistics from the International Trade Centre.

The results showed the market share for semiconductors made in China declining by 18.5 percentage points from 30.2% to 11.7% over those years. In terms of dollar value, imports shrank from US$22.88 billion in 2018 to US$11.74 billion won.

Since the ’00s, China had consistently ranked first for US semiconductor import market share with a rate of around 30%. But as the trade conflicts intensified, its ranking dropped to fourth place by 2022.

Since 2018, the US has imposed three additional tariffs of 10% to 25% on imports from China. It has also restricted the exportation of components and equipment made with US technology and software to China, citing potential national security risks.

The FKI concluded that “the difficulties faced by Chinese companies in beefing up semiconductor production and capabilities while under sanctions has also had some effect on the decrease in exports to the US.”

While imports of Chinese products have fallen, Taiwan and Vietnam have shown notable increases in their share of the US semiconductor market.

Taiwan’s share of the US semiconductor market more than doubled from 9.5% to 19.2% between 2018 and 2022. In the space of four years, its market share climbed from fourth place to first.

In terms of semiconductor import value, Taiwanese products accounted for just US$7.2 billion as of 2018, but jumped all the way to US$19.24 billion by 2022. The rise reflects factors including a sharp increase in system semiconductor orders for companies like TSMC, the biggest name in the foundry market.

Over the same period, the dollar value of semiconductor imports from Vietnam rose by more than 400% from US$1.88 billion to US$9.83 billion. The country’s market share also jumped from 2.5% to 9.8%.

FKI explained, “There has been a trend of Taiwan and Vietnam filling the gap left by China in the area of ‘computer and other components,’ which has been the single biggest semiconductor import category in the US.”

“For each 15-percentage point drop in China’s market share, Taiwan’s and Vietnam’s rose by 6.8 and 3.5 percentage points, respectively,” it observed, adding that Taiwan and Vietnam’s market shares had also “increased substantially for categories that are experiencing rapid growth in the US, including LED displays and solar cell/solar panel modules.”

While Taiwan and Vietnam have made rapid strides in the US market, South Korea’s market share remained more or less steady in third place between 2018 and 2022. In terms of percentage, it enjoyed only a modest 1.8-percentage point rise from 10.8% to 12.6%.

In dollar value, its imports rose from US$8.2 billion in 2018 to US$18.4 billion in 2022, which analysts saw as a natural result of the sharp rise in demand for digital appliances and devices.

Semiconductor imports from Malaysia, which is home to many back-end semiconductor factories, increased slightly from US$17.25 billion in 2018 to US$18.4 billion in 2022. Its share of the US market remained steady in second place. “Back end” refers to the processes of packaging and testing once semiconductors have been produced.

South Korean semiconductor industry insiders said only so much could be read about market competitiveness in the dollar value of US exports by Southeast Asia countries with developed back-end technology, such as Vietnam and Malaysia.

According to this analysis, this method of assessment could give rise to discrepancies with countries’ production capabilities — as in the scenario of a global semiconductor business that completes the semiconductor circuit front-end production process in the US and has back-end packaging work done in Vietnam. In this case, the value would be calculated as a “Vietnamese import.”

“In semiconductors, the back end is a more workforce-intensive process than the front end, and the global businesses typically have their back-end factories in Southeast Asia, where personnel costs are cheaper,” explained an official at one semiconductor company who asked not to be identified.

Indeed, global semiconductor companies such as Intel and Onsemi have large-scale back-end factories operating in Vietnam.

By Ock Kee-won, staff reporter

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