Growing Dependency on Semiconductors
March exports exceeded US$50 billion for the first time. However, the concentration of exports of specific items is rising. To cite an example, the proportion of semiconductor exports topped 20%.
According to the Ministry of Trade, Industry and Energy (MOTIE) announced on April 1, exports rose 6.1 percent to US$51.58 billion last month. It was the first time that exports exceeded US$ 50 billion in March. Average daily exports in March also reached a record high of US$2.19 billion in March. There is concern that Korea’s exports may be hurt by the strengthening of protectionism in the United States but Korea put up a good fight in exports. As a result, Korea’s exports rose for the 17th consecutive month since November 2016.
Semiconductors performed well while taking the lead as one of Korea’s leading export items last month as well. Semiconductor exports hit US$10.8 billion in March, up 44.2 percent from a year earlier. It was the first time exports of a single item reached US$10 billion a month. This was attributed to an increase in demand for high-value-added items such MCPs and SSDs sparked off by the development of new industries such as the internet of things (IoT) and autonomous vehicles.
In addition, increases were recorded in exports of computers (62.5 percent), steel (6.3 percent), general machinery (6.1 percent), textiles (1.5 percent) and petrochemicals (0.8 percent), too.
Although exports have been on a cruise even in the midst of various negative factors, the fact that too much concentration of semiconductor exports is considered a negative factor. Semiconductor exports in the first quarters of this year ran to US$ 29.49 billion, accounting for 20.2% of the total. The percentage of semiconductor exports grew more than 3 percentage points from 17.1 percent last year.
Slowdowns in exports of automobiles and displays, which belong to Korea's flagship products, are also a serious matter. Exports of automobiles and auto parts fell 4.4% and 11.9%, respectively, in the first quarter of this year. Display exports also fell 15.4%.
By region, exports increased to the European Union (up 24.2%), Japan (up 9.7%), China (up 16.6%) and the ASEAN (up 2.2%) year on year. In particular, exports to China (US$13.59 billion, up 16.6 percent) and ASEAN (US$ 8.58 billion, up 2.2 percent) were all March highs.
On the other hand, exports to the US, which have taken a strong protectionist stance, decreased 1.0%. Exports of semiconductors (60.5%) and wireless communications equipment (123.6%) increased due to demand for higher capacity memories demand and the launch of new smartphone models. However, exports of automobiles (-9.7%) and auto parts (-6.6%) dropped. Rising utilization rates at crude oil refining facilities in the US significantly pulled down petroleum product exports (-47.9%). On the other hand, a rise in imports of components for semiconductor manufacturing equipment (147.8 percent), beef (31.7 percent) and orange (39.2 percent) gave rise to a surplus of US$1.05 billion in trade with the US, down 4.15 percent from a year earlier.
Meanwhile, March imports were US$44.72 billion, up 5.0 percent from a year ago.
The Ministry of Trade, Industry and Energy predicted that thorough monitoring would be needed as future export conditions would not be favorable due to the expansion of import regulations, concerns over US-China trade conflicts, the deepening of exchange rate volatility triggered by US interest rate hikes and a possibility of a slowdown in the growth of newly emerging economies among others.