Semiconductor exports are showing positive signs this year while display exports continue to decline. These export trends are forecast to continue after August, leading to wider gaps between the two industries.
According to the export trends report released by the Ministry of Trade, Industry & Energy on August 8, semiconductor export volume up to this July was approximately 34.68 trillion won (US$31.2 billion), which is a 10.4% improvement over the 31.45 trillion won (US$28.3 billion) in the same period last year.
Looking at July alone, the export volume was at 5.34 trillion won (US$4.8 billion), a 21.7% increase over 4.34 trillion won (US$3.9 billion) in July of last year. This is the tenth consecutive month since October that the export volume increased over the same month last year.
With memory semiconductors, increase in smart devices such as mobile phones and tablet PCs have increased demand for DRAM and NAND flash. Higher demand led to higher unit prices, leading the five consecutive months of two-digit y-o-y growth.
In the case of system semiconductors, the high growth rates last year caused negative y-o-y growth in April at -3.3%, and -9.3% in June. However, the general trend is pointed upwards.
Future prospects are also positive.
The world semiconductor market is expected to reenter 4.7% y-o-y growth this year, recovering from 2.3% decline last year.
Furthermore, growth in demand for smart devices is expected to increase from 1% in 1H 2013 to 8% in 2H 2013, leading to better export performance for Korea, a major exporter of semiconductors.
Unlike the semiconductor industry, in which export prospects are looking up, the display industry is still in difficult circumstances.
Display export volume up to this July was at approximately US$17.3 billion, a 2% decline from the US$17.7 billion in a similar period last year.
Looking at July alone, the display export volume was at US$2.36 billion, a 15.1% decline from July of last year. This is the third consecutive month since May that the export volume declined over the same month last year.
Such contraction in the market can be attributed to stagnation in the TV market, which is the largest source of market demand. Furthermore, LCD panels, which are still a major force in this market, have seen deep price falls, which led to decreased export volume.
In addition, the Chinese government’s subsidy policy on power-saving home appliances ended as of May, leading to lowered demand in the Chinese market, which has been a major destination for Korean exports.
Export prospects are also unclear. With the accumulated inventory in the market, panel makers have responded by decreasing equipment investments and adjusting manufacturing rates. However, continued stagnation in panel demand will most likely push the export trend downward for a while.
In particular, demand is focused on small panels for smart devices. Mid and large panels have no significant demand momentum, which will lead to wider export gaps among different panel sizes.
Panel makers are increasing the ratio of open cell products in order to improve profitability, which will further decrease revenue classified as exports. Open cell is a semi-finished product that only combines thin-film transistor (TFT) backplanes, color filters, and display screens to the LCD panel, and excludes parts such as backlight units (BLU) and driver ICs.
“Last year, OLED exports to Korean factories abroad made up for the decline in the LCD market, leading to 5% growth. We initially forecast a growth rate similar to last year, but the worse-than-expected performance so far makes it difficult for us to predict whether we can reach those levels,” said Korea Display Industry Association personnel.