[Peace&Chips] Doosan Also Invested 30 Billion Won... Fabless-Foundry Bridge 'Design House'

Background of Taiwan TSMC Competitiveness 'GUC'
"Korean Fabless Issue is Lack of Design Houses"

Editor's NoteSemiconductors, known as the rice of modern industry. Although it's a term we hear every day, it's often hard to explain. Peace & Chips will make the complex concepts and overall trends of the semiconductor industry easy to digest. Just place your spoon and enjoy.

What would be the top priority to enhance South Korea's semiconductor competitiveness? Both the government and industry point to the "development of system semiconductors." This is because the system semiconductor market is three times larger than the memory semiconductor market, which domestic companies mainly focus on. It is also a sector with great potential for growth alongside next-generation technologies such as artificial intelligence (AI).

Domestic companies currently hold about a 3% share in this market. This is very low compared to their 70% share in the DRAM market and 50% in the NAND flash market within memory semiconductors. As a result, there is a growing call to nurture the domestic system semiconductor ecosystem.

The system semiconductor value chain is divided into "Intellectual Property (IP) - Design (Fabless) - Design House - Production (Foundry) - Post-processing." Specialized companies in each field are increasing their influence in the market. It is easier to understand by comparing it to the process of making a pizza.

If the IP companies make the ingredients like cheese and pepperoni needed to make a pizza, fabless companies add toppings according to the type of pizza they want to make. The design house companies design the pizza to fit different oven shapes for baking. Then, the foundry companies bake the pizza in the oven, and post-processing companies check if the pizza is properly baked and package it.

In South Korea, except for the foundry sector where Samsung Electronics has entered, there are no companies large enough to compete globally in the other fields. In particular, the design house sector is evaluated as having relatively low domestic influence despite its importance.

Design houses act as a bridge between fabless and foundry companies. They redesign chips to fit the appropriate design for each foundry process so that semiconductors designed by fabless companies can be produced. This is why there is a claim that fostering the design house industry is essential to grow the fabless and foundry industries.

In fact, the foundry industry’s top company, Taiwan's TSMC, cites design houses as a key competitive advantage. Taiwan has the number one design house company, Global Unichip Corporation (GUC), which has a symbiotic relationship with TSMC, sharing investments and equity. They play a crucial role in bridging various fabless companies to TSMC.

Recently, Doosan's investment in a design house company can also be viewed in this context. Last month, Doosan decided to invest 30 billion KRW in the domestic design house company SemiFive. Following its declaration to enter the system semiconductor sector last year, Doosan is focusing on design houses as a means to enhance business competitiveness.

At the discussion on "Next-Generation Semiconductor Technology and the Future" held by the Choi Jong-hyun Academic Institute on the 7th, Professor Kwon Seok-jun of Sungkyunkwan University is speaking. /
Photo by Choi Jong-hyun Academic Institute

At the "Next-Generation Semiconductor Technology and Future" event held by the Choi Jong-hyun Academic Foundation on the 7th, design houses were a major topic. Professor Kwon Seok-jun of the Department of Chemical Engineering and Polymer Science at Sungkyunkwan University emphasized during the discussion that "one reason Korea struggles in fabless is the lack of a design house ecosystem."

Professor Kwon said, "Most domestic companies rising as AI semiconductor fabless are going to TSMC." He also stated, "With the AI boom in our country, more fabless companies will emerge," adding, "We need to consider whether these companies should continue to go to Taiwan." This highlights the necessity of nurturing domestic design houses.