The learning curve and the yield factor: the case of Korea's semiconductor industry

Abstract

This article attempts to find out how the Korean economy has grown so rapidly in a short time span of less than 30 years. For that purpose, it focuses on the development of the Korean semiconductor industry-more specifically, the memory-chip segment of the industry-as a case in point. To test the hypothesis that the learning curve effects have been significant in the memory-chip industry, ‘yield factor’ (the ratio of sellable chips to total chips in a wafer) in semiconductor production is used as a measure of the learning progression. That is, by tracing how the yield factor for each generation of memory chips has increased, one is able to see how well the Korean chip makers have exploited the learning effects. This article improves the learning-by-doing modelling by introducing a richer set of yield data; and the unit of analysis employed throughout the article is at the firm level, which is not common in the literature dealing with East Asian development as well as the economics of technology, thus enhancing understanding of the industry dynamics.