The South Korea Semiconductor IP Market is estimated to be valued at USD 1.84 Bn in 2024 and is expected to reach USD 5.63 Bn by 2031, growing at a compound annual growth rate (CAGR) of 17.3% from 2024 to 2031. South Korea has a thriving electronics and semiconductor industry which has aided the growth of the semiconductor IP market over the past few years.

The market is expected to grow steadily over the forecast period driven by increasing demand for advanced semiconductors from industries like consumer electronics, automotive and 5G infrastructure. Major players in the market are focusing on developing advanced IP solutions for new technologies like artificial intelligence, IoT, and autonomous vehicles to capitalize on new opportunities.

Market Driver – Increasing Demand for Semiconductor Intellectual Property (IP) in the Automotive Industry driving the market

The automotive industry in South Korea has experienced tremendous growth over the past decade. Vehicle production in the country has more than doubled since 2010, placing South Korea among the top 10 automotive manufacturing nations globally. This surging automotive production has led to higher complexity in electronics systems being integrated across new automotive models. Modern vehicles now feature more than 100 million lines of software code and semiconductors account for around 40% of total vehicle production cost. The transition towards autonomous, connected and electric vehicles is expected to further boost the role of semiconductors in cars.

Original equipment manufacturers (OEMs) are under immense pressure to introduce advanced driver-assistance systems, telematics solutions, infotainment services and new powertrain technologies within compressed vehicle development cycles. This is driving greater outsourcing of semiconductor intellectual property (IP) design by automotive companies to specialized semiconductor IP vendors. Key IP blocks such as processors, interfaces, safety controllers and battery management systems are increasingly sourced from third parties to leverage their expertise. The demand is also being fueled by growing threat of IP litigation which makes it challenging for automotive design teams to develop IP in-house.

South Korea has emerged as a major automotive production and export hub with companies like Hyundai Motors and Kia occupying a significant share of the domestic market. Their focus on rolling out new electric and connected vehicles aims to strengthen market position globally. This ambitious expansion is estimated to substantially increase the semiconductor content in new automotive platforms. Meanwhile, the presence of large automotive suppliers and tier ones like LG Electronics, Samsung and SK Group is attracting more semiconductor IP vendors to establish local offices and engage with their design teams. All these factors are expected to drive higher revenue opportunities for semiconductor IP providers targeting the automotive segment.

Market Driver – Advancement in Multicore Technology in the Consumer Electronics Sector driving the market

The South Korean consumer electronics industry has been rapidly progressing on the back of strong domestic champions like Samsung and LG. Cutting edge technologies such as 5G, artificial intelligence, augmented reality and virtual reality are being adopted at a fast pace in smartphones, TVs, appliances and other connected devices. The seamless user experience demanded across these platforms relies on high performing multicore processors and dedicated logic IPs. Consumer OEMs require their SoC vendors to integrate more processing cores on-chip while minimizing power and optimizing performance.

This silicon scaling challenge coupled with stringent turnaround times is encouraging fabless semiconductor companies to implement specialized multicore IP subsystems from third party suppliers. At the same time, semiconductor startups are emerging with innovative multiprocessor and interconnect IP solutions targeted towards diverse consumer electronics applications like mobile AI acceleration, computer vision processing and gesture control interfaces. Their agility in developing advanced multicore architectures is attracting strategic investment and partnerships from Korean conglomerates. For example, Samsung's recent funding of a multicore network-on-chip provider underscores the need for cutting-edge interconnect IP to interconnect numerous cores on future 5G consumer devices.

Consumer demand in South Korea for high performance yet power efficient devices continues fueling competition among brands to rapidly launch upgraded models. This significantly reduces the time available for internal multicore system design and validation. Korean semiconductor IP vendors are well positioned to satisfy such tight time-to-market constraints through flexible licensing models, specialized support services and continuous advancement of their multicore platforms. The ability to efficiently integrate third party multicore IPs is cited as a key success factor, driving expansion of the associated IP licensing market.

Market Challenge – Increasing Number of Counterfeits Restraining the market

One of the major challenges faced by the South Korea Semiconductor IP market is the increasing number of counterfeit integrated circuits being manufactured and sold. Counterfeiting of integrated circuits not only infringes on intellectual property rights but also poses serious risks in terms of product quality and reliability. Many counterfeit ICs do not go through rigorous testing and validation steps that authentic products have to undergo. As a result, their performance is unpredictable and they can malfunction or fail prematurely. This compromises the integrity and reputation of authentic products.

The proliferation of counterfeit ICs is a matter of serious concern for South Korean semiconductor companies as it directly impacts their sales and profits. Customers who purchase counterfeit products once may lose trust in the brand and be reluctant to purchase from those companies in the future. It also discourages innovation as companies feel that their innovative efforts may get compromised by rampant IP theft and counterfeiting. Dealing with counterfeiting requires extensive monitoring of supply chains and tracking fraudulent activities, which increases operational costs for companies. Despite continuous efforts by law enforcement agencies, it is challenging to completely stop the manufacturing and distribution of counterfeit goods due to the transnational nature of this illegal business. Unless strong measures are taken, counterfeiting poses a significant restraining force for the growth of the legitimate South Korea Semiconductor IP market.

Market Opportunity – Artificial Intelligence Hardware creating new opportunities for Semiconductor Companies

The rise of artificial intelligence technologies has opened up huge opportunities for the semiconductor industry in South Korea. AI is widely being adopted across various industries for applications ranging from data analytics to robotics. However, training complex AI models requires powerful computing capabilities that can handle massive datasets and complex calculations. This is driving the demand for specialized AI hardware accelerators that can perform AI-related tasks much faster than conventional chips. South Korean semiconductor companies are well-positioned to capitalize on this demand as they have longstanding expertise in chip design and fabrication. There is active R&D underway to develop AI-specific integrated circuits such as GPUs, ASICs, FPGAs and neuromorphic chips that can cater to different types of AI workloads. The development of innovative AI hardware solutions has the potential to significantly boost the fortunes of the South Korean Semiconductor IP market in the coming years. It can help companies increase their market share globally as well as expand into newer application domains leveraging AI technologies. The opportunity for hardware IP licensing is also set to grow as AI chipsets make their way into various consumer and industrial products. Overall, AI is poised to be a major disrupting force that opens up novel growth avenues for semiconductor players in South Korea.

Focus on advanced process technologies: Leading IP providers such as Samsung, SK hynix and Qualcomm have focused heavily on developing IPs for the most advanced process nodes such as 5nm and below. For example, Samsung launched its 5nm EUV process technology in early 2020 and provided wide range of IP solutions including CPU, GPU, DSP and memory IPs tailored for 5nm. This helped Samsung gain leadership position in 5nm market.

Collaborations and partnerships: Players have formed strategic partnerships with IDMs, fabless companies and foundries to gain early access to their technology roadmaps and co-develop IPs. For example, in 2017 SK hynix partnered with Intel to develop high bandwidth memory interface IPs. This strengthened SK hynix’s position in memory IPs. Similarly, Synopsys has extensive partnerships with GLOBALFOUNDRIES, TSMC and Samsung Foundry to develop process-optimized IPs.

Solutions for emerging applications: IP providers have focused on diversifying their portfolio to cater to emerging applications like 5G, AI, automotive etc. For example, in 2020 Qualcomm launched its 5G RF front-end IP solutions to support 5G infrastructure build-out. This helped Qualcomm gain significant traction in 5G base station market. ARM launched its Helium and Neoverse platform IPs optimized for AI/ML workloads. This strengthened ARM’s position in AI processor market.

Acquisitions: Companies have acquired smaller IP vendors to enhance their portfolio offerings. For example, in 2021 Samsung acquired Astera Labs to enhance its AI/ML IP portfolio. Similarly, in 2020 Synopsys acquired AspenCore and SolidSight to expand its offerings in USB, PCIe and automotive domains respectively. These acquisitions helped players address diversifying market requirements.

Insights By Design IP: Processor IP Drives the Market Amidst Growing Demand for Powerful and Efficient Processors

Insights By Design IP, Processor IP contributes the 55.4% share of the market owning to the ever-growing demand for powerful yet efficient processors. Processor IPs are integral components for semiconductors used in various consumer electronics and computing devices that require high processing capabilities. As the applications for devices expand with evolving technologies, the demand for faster and more capable processor IPs is surging. South Korean OEMs are continuously focusing on integrating powerful processor IPs from semiconductor IP vendors to deliver premium performance in their products. Additionally, the growth in applications of AI, machine learning and IoT is pushing the need for specialized processor IPs with specialized instructions and architectural enhancements. This is benefitting the processor IP segment. Furthermore, the strong presence of global tech giants and growing domestic brands in South Korea is driving more R&D towards developing sophisticated processor IPs. Tech companies rely on processor IPs from IP vendors to reduce development costs and time to market for their cutting-edge devices. The competitive South Korean consumer electronics market therefore contributes highly to the processor IP segment growth.

Insights By Revenue Source: Royalty Segment Dominates Due to High Reliance on Interface Ips

Insights By Revenue Source, the Royalty segment contributes the 51.1% share to the South Korea Semiconductor IP Market owing to the high reliance on interface IPs. Interface IPs play a crucial role in connecting different components of a semiconductor chip and expanding its capabilities. They provide communication protocols and electrical specifications to allow interaction between various blocks on an IC. As semiconductor applications require connecting with more external components and expanding connectivity options, the demand for sophisticated interface IPs is amplified. This rising need is boosting the royalty revenues of IP vendors. Moreover, South Korean OEMs prefer licensing premier interface IPs from reputed vendors under royalty contracts to integrate latest connectivity standards in their products without investing heavily in internal interface IP development. Established as well as emerging connectivity technologies such as USB, Ethernet, PCIe, Bluetooth and Wi-Fi rely majorly on licensed interface IPs. The emphasis of South Korean electronics industry and brands on introducing innovative connectivity features also drives higher reliance on licensed interface IPs strengthen the royalty segment.

Insights By Vertical: Consumer Electronics Leads the Market Owing to Country's Prominent Position in Global Consumer Electronics Industry

Insights By Vertical, Consumer Electronics contributes the highest share to the South Korea Semiconductor IP Market owing to the country's strong foothold in the global consumer electronics industry. South Korea is home to leading electronics giants that invest heavily in developing class-leading consumer devices. This vertical consumes a significant share of semiconductor IPs that serve as fundamental components of various consumer products. Right from smart phones to TVs, home appliances and more, almost every consumer electronic item ships with customized semiconductors featuring IPs. As consumer preferences shift towards smarter, connected and futuristic electronic devices, the demand for specialized semiconductor IPs sees a notable uplift from this vertical. Additionally, the South Korean government has announced several funding programs and initiatives to stimulate R&D in these strategic electronics vertical. This is encouraging more semiconductor IP customization and licensing to spur innovations in consumer electronics. Overall, the prowess and prioritization of South Korea's consumer electronics industry differentiate it as the leading consumer for semiconductor IPs compared to other verticals.

Arm Holdings, Synopsys, Inc, Cadence Design Systems, Inc, Imagination Technologies Limited, Lattice Semiconductor Corporation, CEVA, Inc, Rambus Incorporated, Silvaco Inc, Intel Corporation, eMemory Technology Inc, 

• In August 2024, AkeanaTM, a company committed to driving dramatic change in semiconductor IP innovation and performance, launched its comprehensive RISC-V processor IP portfolio. Akeana, formed by the same team that designed Marvell's ThunderX2 server chips, offers a variety of IP solutions including microcontrollers, Android clusters, AI vector cores and subsystems, and compute clusters for networking and data centers. This launch, backed by A-list investors like Kleiner Perkins, Mayfield, and Fidelity, showcases Akeana's mission to move the industry beyond the status quo of legacy vendors and architectures with equitable licensing options and processors that exceed current performance gaps.
• In August 2020, CEVA, Inc., a prominent licensor of wireless connectivity and smart sensing technologies, announced that its RivieraWaves Wi-Fi 6 IP platform became the world's first Wi-Fi IP to receive Wi-Fi CERTIFIED 6™ status from the Wi-Fi Alliance. This certification is specifically aimed at enhancing connectivity for smartphones, smart TVs, and various other devices.
• In February 2020, Synopsys, Inc., a leading provider of semiconductor IP solutions, launched its ARC Communications IP Subsystem. This new subsystem integrates with the low-power ARC EM11D Processor to deliver efficient low-bandwidth communication alongside DSP and RISC performance, specifically designed for Wireless Narrowband IoT applications.

• By Design IP
  • Processor IP
  • Interface IP
  • Memory IP
  • Other IP (D/A and A/D Converter)
• By Revenue Source
  • Royalty
  • Licensing
• By Industry Vertical
  • Consumer Electronics
  • Telecom
  • Automotive
  • Healthcare
  • Others