SEOUL — Amid intensifying pressure from United States supply chain restrictions, China's semiconductor industry is aggressively expanding its outreach to South Korean semiconductor materials, components, and equipment manufacturers to secure alternative technology supply chains.

According to semiconductor industry sources on May 18, representatives from the Shanghai Integrated Circuit Industry Association (SICA) recently visited South Korea to hold closed-door meetings with multiple domestic suppliers. The delegation reportedly offered lucrative incentives, including localized investment packages, joint R&D opportunities, and strategic product sourcing arrangements to encourage South Korean firms to establish a presence in Shanghai.

An executive at a South Korean equipment company, speaking on the condition of anonymity, confirmed the aggressive courting. "The Shanghai delegation is pitching diverse collaboration models with highly attractive incentives. Internally, we are thoroughly reviewing various market entry strategies for China," the executive said.

SICA is a premier regional industry body responsible for fostering Shanghai’s entire semiconductor ecosystem, spanning fabless design, foundry manufacturing, packaging, and equipment. The association has traditionally spearheaded global tech exchanges, notably through major annual events like SEMICON China.

The Yangtze River Delta, centered around Shanghai, has emerged as the epicentre of China's rapid semiconductor growth. Out of the new semiconductor fab projects planned in Asia through 2029, a staggering 47 are concentrated in China—the highest volume globally. This expansion is heavily driven by legacy (mature) memory chips and power semiconductors for electric vehicles (EVs) and industrial applications. Consequently, China's global market share in mature node production capacity has skyrocketed from a mere 2.2% in the past to approximately 33% today.

Financial backing has been robust. Launched in 2019, the Sci-Tech Innovation Board (Star Market) on the Shanghai Stock Exchange has served as the financial backbone for this growth, with between 100 and 130 semiconductor-related companies currently listed. This solid capital ecosystem positions Shanghai as the core engine driving China's semiconductor ambitions.

Industry analysts interpret SICA’s recent trip to South Korea as a strategic move to integrate South Korea’s highly reliable and production-proven equipment ecosystem into its own. South Korean suppliers have honed their technological capabilities through years of integration within the global supply chains of industry giants like Samsung Electronics and SK Hynix, making them attractive, low-risk partners.

Blocked from accessing cutting-edge American technologies, China sees South Korean equipment and materials as a vital bridge to scale its technical hurdles. By accelerating the entry of South Korean firms into the Chinese market, Beijing aims to broaden its defensive supply chain alliance.

"An increasing number of global companies are boosting their investment portfolios by transferring technologies to local Chinese entities," an industry insider noted. "As China attempts to transition its focus from mature nodes to more advanced processes, the demand for verified South Korean suppliers who possess actual mass-production experience is seeing a massive surge."

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