"826 Trillion Won vs. 10 Trillion Won": U.S. Foundation Warns of "Chilling Scale Gap" and China's "Industrial Invasion"

A U.S. research institute has warned that as China rapidly expands its production scale across advanced industries, South Korea's industrial base could gradually shrink.

The analysis also suggests that even in the High Bandwidth Memory (HBM) sector, where South Korea holds an overwhelming advantage, its long-term competitiveness could weaken.

According to a recent report released by the Information Technology and Innovation Foundation (ITIF), a U.S. think tank, the added value increased by China across 10 advanced industries from 2018 to 2022 reached 611.5 billion dollars, equivalent to about 826 trillion won.

During the same period, South Korea saw an increase of only 7.4 billion dollars, or about 10 trillion won.

In terms of the scale of increase, China is more than 80 times that of South Korea.

Even in industries where South Korea has strengths, China's production scale is already substantial.

In the computer and electronics industry, which includes semiconductors, the added-value production in 2022 was 133.6 billion dollars for South Korea and 385.7 billion dollars for China, showing a gap of nearly threefold.

Over the four years from 2018, South Korea's production decreased by 7.6%, while China's increased by 6.2%.

In the electrical equipment sector, South Korea had a higher industrial specialization than China, but showed a massive gap in absolute scale, with production standing at 29.8 billion dollars for South Korea and 261.6 billion dollars for China.

Regarding South Korea's advanced industries, the report diagnosed that "the danger is not a sudden industrial collapse, but a gradual contraction."

It means that as China continues to expand its materials, equipment, parts, services, and production capacity, it could chip away at the industrial territories previously occupied by South Korea.

However, South Korea's dominance remains distinct in HBM, a cutting-edge AI memory.

In the first quarter of this year, SK Hynix's global HBM market share stood at 58%, and when combined with Samsung Electronics, South Korean companies' market share reached 79%.

The report suggests that South Korea must utilize the current HBM boom as an opportunity to broaden its industrial base.

It added that South Korea should accelerate the commercialization of next-generation memory, advanced packaging, AI semiconductors, batteries, and robots, while expanding supply chains and production scale alongside allies such as Japan, the United States, and Europe.

The report particularly emphasized cooperation with Japan, noting that while China's production scale in the machinery and equipment sector is more than 10 times that of South Korea, combining the production of South Korea and Japan reduces the gap with China to less than threefold.

The report stressed that before China pulls further ahead across the entire industrial ecosystem, South Korea must expand its current AI memory dominance into industrial competitiveness encompassing materials, equipment, and services.

Reported by Kim Minjeong | Video by Kim Min-ji | Graphics by Sumin Lee | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.