South Korea is falling further behind in its chip design industry compared to China, whose market growth is getting stronger, a report said Sunday.

   China's fabless industry grew 28.1 percent last year from the previous year, marking sales of $5.76 billion, according to the report from the Korea Institute for Industrial Economics and Trade. The increase raised the country's global market share from 6 percent to 7 percent.

   South Korea recorded $1.74 billion in sales, an increase of 2.6 percent, for a world market share of 2.1 percent, a fall from 2.3 percent in the previous year.

   Fabless companies provide integrated chip designs but have no manufacturing facilities of their own. They place orders with foundries.

   The KIET report said there are some 500 chip design companies in China, with the industry getting full support from the state.

The country, which has the biggest demand for semiconductors, still relies heavily on foreign firms to meet its demands but is trying to become competitive in chip design, driven by expanding low-end smartphone market at home, the report said.

   "China's chip imports amounted to $231.3 billion last year, up 20.4 percent from a year before," Joo Dae-young, a researcher at KIET, said. "The Chinese government is hoping to localize the semiconductor industry so that it can lessen the import of chips whose amount is bigger than imports of crude oil." (Yonhap)