Thinking of South Korea's electronics design scene brings to mind the usual suspects: memory giants Samsung and Hynix. And now we have MagnaChip, a non-memory unit of Hynix that is trying its luck in the logic and fab businesses. The Hynix offshoot is selling semiconductor products such as display driver ICs, CMOS image sensors as well as microcontrollers, and, according to an iSuppli Corp. ranking, is the world's seventh largest foundry service provider.

Beyond this envy of big names, however, is a microcosm of small and medium-sized companies also doing well in chip- and system-level designs. Chip design outfits, for instance, operate in a small setting and their business model is rather simple: Hire a few smart engineers, pick the right application and focus on it.

What drives some engineers to join these startups is their quest to become founders and share the fruits of success. In this venture boom—which is not limited to SoC and encompasses system houses as well as application-specific ventures in areas like gaming—they don't want to limit themselves.

In Korea, design houses are predominantly focusing on cellphone and DTV applications, for which they first look to large Korean system houses like Samsung, LG and Pantech & Curitel. Other critical segments where Korean design houses are leaning heavily are display driver ICs and new technologies such as OLEDs.

Once they establish themselves with a proven technology, they go overseas to attract international customers. Emerging Logic & Memory Solutions Inc. is one such company that provides SRAM solutions for Nokia, which makes up 20 percent of its total revenue stream.

Within the chip design realm—unlike in the memory business, which requires huge initial investments—these smaller firms are better off with SoC-centric designs. In terms of their strategic focus, what these design houses do is follow the trend. While the cellular, DTV and consumer boom may not last very long, these companies will find the next killer chip in home networks, telematics and robotics.

A tempting issue that these fabless companies are now facing is strategic cooperation with foundries. Among major fabs in South Korea, Samsung fabs are the best in terms of intellectual property and process technology, but they are fully booked.

Not surprisingly, therefore, Korean chip designers have started to look toward mainland China and Taiwan to forge new fab relationships. Semiconductor Manufacturing International Corp. (SMIC), for instance, was one of the major participants at the recent SEDEX Korea show in Seoul.

Such deals will open up new venues of cross collaboration among three significant design destinations in Asia. Taiwan, especially, is a competitor in one way and a partner in another.

Execs at the IT-SoC Association, the national organization tasked to advance the chip design industry, acknowledge that Taiwan design houses are better than their Korean counterparts when it comes to SoC expertise. Many Taiwan-based semiconductor firms are already selling chip solutions to system houses in Korea.

Meanwhile, Korea Inc. is finally opening up to the rest of the world and its semiconductor industry is in search of venues beyond the legacy DRAM business. The South Korean government is starting to recognize the potential of SoCs by providing systemic support to new design endeavors.

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