- ▲ Panoramic view of the Chinese smartphone brand Honor exhibition booth ⓒNew Daily DB
Chinese products are shaking up the Korean economy. It’s not the ‘cheap’ product you were looking for in the past due to its cheap taste. It is not a problem that can be laughed off as a ‘continental mistake’. Chinese products are encroaching on everything from small items such as home appliances and smartphones to heavy-duty products such as cars and ships. Experts agree that, unlike the United States or Europe, Korea, where it is difficult to erect tariff barriers, is extremely vulnerable to China’s capital and volume offensive. We look into whether there is still a way for the defenseless domestic industry to survive.
China’s electronics and IT industries appear to have found a new breakthrough.
As U.S. sanctions continued, the high-tech IT industry, including smartphones and displays, was expected to struggle, but it is holding on steadfastly with ‘low prices’ at the forefront.
On one hand, there is even a prediction that China’s counterattack, which has internal competitiveness, will become stronger in the future.
Ironically, the place hit hardest is Korea.
They are encroaching on a significant portion of Korea’s market share with their technological prowess at breakneck speed and price competitiveness that is close to bargain prices.
Following the LCD (liquid crystal display) display industry, which was the first to lose its position, now even OLED, where Korea had an unrivaled technological advantage, has begun to lag behind China in terms of volume. The reality is that not only the price but also the technology gap is shrinking significantly.
The gap in the semiconductor sector is also narrowing day by day.
On the 24th (local time), Chinese market research company CINNO Research announced that in the first quarter of this year, China’s market share in terms of smartphone OLED panel shipments exceeded 50% for the first time, surpassing Korea’s. China, which had narrowed the gap last year, succeeded in reversing this year, and in addition to BOE, China’s No. 1 display company, second and third-ranked companies such as China Star (CSOT) and Visionox also grew rapidly, laying the foundation for a comeback victory. It was assessed that it did.
Looking at the global display market as a whole, China is not only surpassing Korea, but is widening the gap further. According to the Korea Display Industry Association, based on sales last year, Korean companies’ share of the display market was 33.4%, and China’s was 47.9%. While Korea’s market share decreased further, China’s market share increased, widening the market share gap between Korea and China from 5.6 percentage points (p) to 14.5 percentage points in 2022.
As the Chinese government expanded the LCD industry, the Korean display industry had no choice but to lose a significant portion of its LCD industry to China a few years ago. As China has taken over the LCD industry over the past 10 years, the Korean display industry has been going through a difficult time, closing down its LCD production lines and converting to OLED, and facing major challenges in terms of performance and management.
- ▲ Samsung Electronics booth participating in ‘AWE (Appliance & Electronics World Expo) 2024’ in Shanghai, China ⓒSamsung Electronics
The smartphone market, which had been dominated by Samsung and Apple, has completely changed as China has increased its presence. In particular, the first thing that soared as the U.S. began stricter consumer regulations was the sales of Chinese brand smartphones.
The so-called ‘patriotic consumption’ wave has shaken the Chinese smartphone market. Previously, there was a clear preference for the iPhone of Apple, an American company, but as the conflict between the United States and China intensified, an atmosphere of preferring domestic phones over foreign products was formed, leading to even growth of Honor, Oppo, Vivo, Xiaomi, etc., led by Huawei. It continues.
In the first quarter of this year, Apple’s market share decreased by 19.1%, showing the worst level since COVID-19. Vivo, Honor, and Huawei filled the vacancy left by Apple, which had the largest market share in China, and Vivo took the throne in terms of smartphone sales share in China.
Samsung’s situation is so serious that it is virtually continuing its existence in the Chinese market as local Chinese brands begin to grow. The market share, which began to fall in 2014, fell below 10% in 2015, and from 2018, it is difficult to find even on the list of major smartphone manufacturers. Some even say that Samsung’s long-awaited goal is to break the 0% smartphone market share in China.
In the electronics and IT industries, the only field that is evaluated to be maintaining a super gap is semiconductors. Even so, it is limited to cutting-edge semiconductors. The mainstream opinion is that China has failed to acquire technological capabilities that can match Korea’s, despite pouring enormous funds and support for more than 10 years, calling for a ‘semiconductor boom’. However, the story is different when it comes to general-purpose (legacy) semiconductors.
As the United States began to tighten regulations on high-tech industries, China shifted its focus to the general-purpose semiconductor market, where the technology gap is not large but can be pushed forward through economies of scale. General-purpose semiconductors are a field in which China has a certain level of technological prowess, and efforts were made to increase general-purpose production capacity under the water under the calculation that sufficient production would be possible without upgrading American equipment, which is the core of cutting-edge semiconductor production.
China is going all-in on low-cost chip production with the goal of controlling all general-purpose products, which account for 80% of the global semiconductor market. According to market research firm Trend Force, China’s share in the general-purpose semiconductor market as of last year was 29%, up 40% from the same period last year. Taiwan ranks first in market share (49%), but China’s growth in the general-purpose semiconductor market is difficult to keep up with, with some predicting that it will only be a matter of time before China surpasses this. There is also support for the forecast that China will account for one-third of the general-purpose market in 2027, three years later.
The problem is that China’s intention is to start by dominating the general-purpose market and eventually aim to produce cutting-edge semiconductors. Although the United States is enforcing high-intensity export controls to block China’s high-tech semiconductor production, China is also steadily bypassing these regulations and focusing on technology research and development (R&D) for high-tech semiconductor manufacturing, and has recently entered into a new future for the semiconductor industry. It is important to note that they are reaching out to the emerging AI (artificial intelligence) chips.
According to major foreign media, 10 organizations, including Chinese universities and research institutes, appear to have secured Nvidia’s cutting-edge AI chips through servers manufactured by companies in the United States or Taiwan. China is likely to use this chip to develop its own AI chip.
Given that domestic semiconductor companies such as Samsung and SK Hynix supply high-performance products and high-specification memories such as HBM (High Bandwidth Memory), which are key to AI semiconductors, the status of China’s AI semiconductor development cannot be ignored. It is pointed out that experts’ concerns that the Chinese government will spare no effort in providing behind-the-scenes support for the development of cutting-edge AI semiconductors as the United States adds more regulations are becoming a reality.
Tags: #Shake #smartphonedisplay.. #semiconductors #erode Korean food waste
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