The value of the Japanese yen is nearing its lowest point in 33 years, emerging as a hidden challenge for South Korea’s industrial sector. Key industries such as steel, automotive, and electronic components, which directly compete with Japanese counterparts, are facing weakened price competitiveness and real impacts on performance.
As of Nov. 20, the deepening yen depreciation phenomenon is weakening the price competitiveness of major industries in South Korea that are either highly competitive with Japanese companies or at similar technological levels. The value of the yen against the dollar is fluctuating at around 150 yen per, the lowest since 1990. The won-yen exchange rate closed at 865.83 won per 100 yen on the same day. On Nov. 16 (856.80 won), the rate hit its lowest in over 15 years since Jan. 10, 2008 (854.31 won) during the global financial crisis, indicating a prolonged yen depreciation trend.
In South Korea, the steel industry has been directly hit by the intensifying yen depreciation. Japan, leveraging its “unprecedented weak yen,” is supplying steel products like hot-rolled coils and thick plates to the Korean market at low prices. Korean steel customers are increasingly turning to Japanese products, which are of high quality yet significantly less expensive. Japan accounts for about 35% of Korea’s steel imports, making it the second-largest importer after China. This situation inevitably weakens the global export competitiveness of the Korean steel industry. Japan competes with South Korea in key steel product categories such as steel pipes, hot-rolled steel, heavy plates, sheets, and bar-shaped steel in markets like Southeast Asia, Europe, and the Middle East.
Samsung Electro-Mechanics, which produces Multi-Layer Ceramic Capacitors (MLCC) used for stable current flow in electronic circuits of TVs, smartphones, home appliances, and cars, is also deeply concerned about the weakening yen. Samsung Electro-Mechanics, with a 24% market share, is second in the MLCC industry after Murata, which holds 34%. To compete with Japanese companies, Samsung Electro-Mechanics is forced to lower its Average Selling Price (ASP), struggling to defend its performance.
The Korean automobile industry, with lower market dominance than Japan in the global market, is also adversely affected by the weakening yen. As the price difference between Korean and Japanese cars in markets like the U.S. and Europe is not significant, the relative price drop of Japanese cars due to the weaker yen is becoming more pronounced. It is analyzed that consumers might increasingly opt for Japanese cars, especially in the internal combustion engine segment where both countries have less technological differentiation compared to electric vehicles.
The semiconductor industry, led by Samsung Electronics and SK hynix, is expected to be less impacted due to the lower degree of export competition between South Korea and Japan.