Fall of ‘The Rising Sun’? – Korea Now Ahead of Japan in Global Semiconductor Market

Japan has been much harder hit by the global financial crisis than its North East Asian neighbors and has since struggled to catch back up. The country's recovery has of course further been hampered by the devastating tsunami and subsequent nuclear crisis in Fukushima. Suffice to say that Japan has seen better days, and now news that in the lucrative semiconductor market Japan is also losing out to Korea. According to research conducted by the Korean government South Korea overtook Japan, in terms of global market share for semiconductors, last year.

The combined output of South Korean manufacturers of semiconductors is estimated to have surged 16% from a year earlier to about US$50.06 billion in 2013, according to the Ministry of Trade, Industry and Energy.

As of 2013, most Japanese companies no longer enjoy the same reputation they did about one to two decades ago. Where Sony used to stand head and shoulders above the rest, Samsung now towers as the dominant force in the electronics manufacturing stakes, with Chinese and Taiwanese electronics companies gaining on thier once powerful neighbor at speed. Only a few Japanese companies have significant international market share now, and are able to claim to be well-known brands.

Despite Japanese companies having been responsible for a number of important innovations, such as Sony's Walkman, Toshiba's mass-produced laptops, JVC's the VHS recorder, and Sharp's solar cells and LCD screens, Japanese brands are now little more than a distant memory in the from the perspective of most consumers.

In the last ten years or so many of the largest Japanese electronics companies have struggled financially and lost market share, particularly to South Korean and Taiwanese companies. In categories such as portable media players, TVs, computers and semiconductors Japanese companies have lost their dominant position. Hit hard by the economic crisis of 2008 Sony, Hitachi, Panasonic, Fujitsu, Sharp, NEC and Toshiba reported combined losses amounting to $17 billion. In contrast, by 2009,Samsung Electronics operating profit was more than double that of the combined operating profit of nine of Japan’s largest consumer electronic companies.

The cycle of power is ever turning, and it will be interesting to see what happens to the once mighty Japanese manufacturing economy over the next year. What is certain is that Korean companies will continue to dominate the global tech landscape and are likely to play an increasingly important role in shaping innovation in the sector in the short to medium term.

 

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