South Korea’s semiconductor industry continues to assert its position as a global leader, ranking second in equipment purchases last year, according to the International Semiconductor Equipment and Materials Association (SEMI).

SEMI reported on April 14 that South Korea spent $20.47 billion on semiconductor equipment in the previous year, marking a 3% increase from 2021. This growth is largely attributed to the rising demand for High Bandwidth Memory (HBM), which has become crucial for applications requiring extensive data processing capabilities such as artificial intelligence and graphics processing.

The global semiconductor equipment purchase amount reached an unprecedented

$117.1billion last year, with South Korea, China, and Taiwan accounting for 74%.

China’s semiconductor equipment purchases amounted to $49.55 billion — a 35% increase from the previous year—thanks to substantial government support aimed at strengthening local production capabilities. SEMI explained that China has secured its top position by actively expanding semiconductor production and benefiting from government support.

In contrast, Taiwan’s semiconductor equipment purchases decreased by 16%, highlighting competitive pressures faced by major players like Taiwan Semiconductor Manufacturing Company (TSMC) amidst geopolitical tensions and rivalry with South Korea and China.

The surge in HBM demand has significantly influenced South Korea’s spending patterns. SK Hynix emerged as a leader in this sector, investing approximately 10 trillion won (approximately $6.89 billion) on machinery last year—nearly four times more than in 2021. Samsung Electronics also made substantial facility investments totaling 46 trillion 279.2 billion won within the semiconductor sector.

Despite these achievements, South Korea narrowly retained its second-place ranking in equipment purchases for 2023 due to a downturn cycle in the global semiconductor market and inventory adjustments within the front-end industry. The purchase amount decreased to $19.94 billion; however, SEMI forecasts an increase in fab equipment investments this year. SK Hynix plans to ramp up its annual capital expenditure from 21 trillion won to 27 trillion won and utilize its M15X fab in Cheongju, Chungbuk—set for completion in the latter half of this year—as a production base for HBM.

The complexity and increased demand for AI and HBM manufacturing have led to a recovery trend in the equipment market despite declines in backend sectors over two consecutive years. SEMI noted that sales of assembly and packaging equipment rose by 25%, while test equipment sales increased by 20%.