The semiconductor industry has grown steadily since the 1980s as semiconductors have been used as core components in computers, smartphones, and other devices. The global semiconductor market reached USD 677.2 billion in 2024. Recently, artificial intelligence (AI) has been driving the growth of the semiconductor market, and the sector is projected to grow at an average annual rate of 6.8% over the next five years. In 2024, South Korea's total semiconductor exports reached USD 141.9 billion, making semiconductors the country's largest export item. Semiconductors account for 20.8% of South Korea's total exports and is leading the national economy and industry.

South Korea accounts for approximately 20% of the world's semiconductor production capacity and, serves as a key semiconductor manufacturing base within the global semiconductor supply chain alongside China and Taiwan. Furthermore, South Korea's geographical advantages provide an optimal investment environment not only for South Korean companies but also for those seeking to enter the East Asian semiconductor market.

Based on these large-scale semiconductor manufacturing facilities, South Korea formed a massive semiconductor equipment/materials market and has become the world's most active country in semiconductor equipment investment. As of 2024, the country holds a 17.4% share of the global semiconductor equipment market and a significant 16.6% share of the semiconductor materials market. Considering that these figures include the combined equipment investment of Samsung Electronics and SK Hynix, which are located in China, the actual size of South Korea's semiconductor equipment and materials market is even larger. For companies producing semiconductor equipment and materials, South Korea and its companies represent a significant opportunity.

Many global companies in the materials, components, and equipment sectors are expanding into South Korea by noting the country’s strength in semiconductors. Lam Research, a U.S. company specializing in semiconductor etching and deposition equipment, has steadily increased its production in South Korea since establishing Lam Research Manufacturing Korea in 2011. It began operating a new 5,170㎡ factory in Hwaseong, Gyeonggi-do in 2021 and plans to open its Yongin campus in 2024. The campus will serve as Lam Research's largest R&D center in South Korea, focusing on research, technology training, and customer collaboration. Furthermore, ASML, the exclusive supplier of advanced EUV lithography equipment, is establishing a high-tech EUV cluster in Hwaseong. Semiconductor material makers like Tokyo Electron (TEL), DuPont, Merck, and Ulvac are also expanding their investments for production in South Korea. Moreover, numerous South Korean materials, components, and equipment producers are engaged in R&D business for each semiconductor process, collaborating on various projects with global companies that have entered the South Korean market.

Looking beyond memory semiconductors, the South Korean government is very committed to fostering system semiconductors and working to emerge as an all-round semiconductor powerhouse through initiatives such as the K Chips Act and semiconductor mega cluster projects.

Aiming to build the world's best semiconductor supply chain, it has expanded tax incentives for semiconductor equipment investment (20-30%) and R&D (30-50%), while actively improving labor and environmental regulations to stimulate semiconductor investment. Furthermore, the government plans to further support infrastructure development, including water supply and power, in the Pyeongtaek and Yongin semiconductor complexes where large-scale new semiconductor factory construction is underway.

The government also plans to cultivate and supply 150,000 specialized personnel needed in the semiconductor industry by 2030 through regulatory reform and financial support. It will further support inter-company R&D collaboration by establishing technology-specific semiconductor clusters.

Furthermore, the South Korean government is striving to create a favorable environment for the semiconductor industry by enacting and revising relevant laws.