Ministry of SMEs and Startups "Fostering the Most Venture-Like Sector, Fabless"... Listening to Corporate Opinions

Minister Kwon Chil-seung Holds Forum with 7 Fabless Companies
Discussing Fabless Development Plans...Specifying Policy Tasks

[Asia Economy Reporter Kim Bo-kyung] On the 29th, Kwon Chil-seung, Minister of SMEs and Startups, will listen to the difficulties faced by system semiconductor design-specialized companies (fabless) and discuss government policy directions.

Minister Kwon will hold a forum in the morning at the Semiconductor Joint Research Center of Seoul National University with representatives from seven venture and startup companies representing domestic fabless firms.

The forum was organized to hear the on-site voices of small and medium fabless companies, which are considered core competitiveness in the system semiconductor field, and to discuss government policy directions in depth.

In particular, Puriosa AI, which recently surpassed NVIDIA and was recognized for world-class technology at the global artificial intelligence (AI) semiconductor competition (MLPerf), will also attend this event.

◆Domestic Fabless Companies Decreasing Due to Startup Burdens = South Korea maintains the global number one position in the memory semiconductor sector, but in the system semiconductor (non-memory) sector, whose market size is more than twice that of memory semiconductors, the global market share is only in the 3% range.

System semiconductors are experiencing explosive demand growth due to the Fourth Industrial Revolution and the acceleration of the non-face-to-face economy. Demand is expected to further increase in areas such as 5th generation (5G) communication, artificial intelligence, and autonomous driving.

[Image source=Reuters Yonhap News]

Additionally, system semiconductors have a division of labor structure where fabless companies handle design and large corporations handle production. Due to the characteristics of small-volume, multi-variety production, the design capabilities of fabless companies, mainly operated by small and medium enterprises, play an important role in enhancing the overall competitiveness of system semiconductors.

However, fabless companies face high initial investment costs and difficulties in securing stable sales channels, making startup risks significant. Government policies have also focused on the foundry sector led by large corporations, leading to opinions that support policies for fabless companies are relatively insufficient.

The number of domestic fabless companies has decreased to about 35% compared to over ten years ago (around 200 companies in 2009 → about 70 companies last year), and only one Korean company is ranked within the global top 50 fabless firms, indicating a weak corporate scale and foundation.

◆Ministry of SMEs and Startups: "Supporting Fabless Growth... Leading the Global Market" = Recently, the Ministry of SMEs and Startups established three core strategies to qualitatively and quantitatively expand fabless companies.

The three core strategies are ▲promoting fabless startups by alleviating initial semiconductor design costs (design) ▲stabilizing production supply through cooperation with large corporation foundries (production) ▲creating cooperative platforms with demand companies such as large and medium-sized enterprises (sales channels).

The Ministry plans to reflect opinions discussed at the forum and work with related ministries and agencies to concretize policy tasks and prepare measures to nurture small and medium fabless companies with global competitiveness.

Minister Kwon said, "Fabless is considered the most venture-like field due to its characteristics of small-volume, multi-variety production and research and development-centered competitiveness."

He added, "As recently demonstrated by the case of Puriosa AI, our companies are showing world-class technological capabilities in the system semiconductor field and gaining recognition for their potential. We will actively support fabless ventures and startups so that they can lead the global market."