Exports of semiconductors, the sole driving force behind Korea’s exports, are significantly slowing down.
The Ministry of Trade, Industry and Energy said on August 16 that semiconductor exports swelled 30.2% year on year in July to US$10.47 billion.
The growth rate in July is impressive, but it is about half of the 60.7% surge posted in July of last year.
Semiconductor exports topped US$10 billion for three consecutive months due to continued strong demand from the server and smartphone sectors.
Exports of memory semiconductors climbed to US$7.53 billion, up 45.3% from a year earlier. Semiconductor exports continued to grow for 22 straight months, but their growth slowed down. A fall in memory prices among others sent semiconductor export growth falling to the 40% level (40,7%) in February from 53.8% in January. In April, the growth dropped to 30% (36.6%), and in June, hit the 30% level (36.6%) and hovered slightly above the 30% level in July, showing a clear slowdown. Some experts analyzed that the Chinese government’s focus on semiconductors such as supporting Chinese semiconductor companies with its National Semiconductor Industry Investment Fund is also threatening Korea's exports which is highly dependent on semiconductor exports.
According to the Ministry of Trade, Industry and Energy, in July, provisionally, Korea’s ICT exports totaled US$18.56 billion, a year-on-year increase of 18.2% and its ICT imports hit US$9.1 billion and a trade balance stood at US$9.46 billion. Exports of all of Korea’s three major export items -- semiconductors, displays and mobile handsets – increased together in 43 months since December 2014. As a result, Korea’s ICT export growth rate has remained a double digit for 20 consecutive months since December 2016. Display exports grew 2.6% to US$2.51 billion thanks to growing demand for organic light emitting diode (OLED) panels in spite of intensifying competition in exports of liquid crystal display (LCD) panels. LCD exports dropped 14.8% year on year to US$1.24 billion due to increased production by Chinese competitors among others.
Although ICT exports have been putting up a good fight on the whole, it is forecast by some experts that the growth of Korea’s exports would slow down due to Korea’s weak export structure lopsided toward exports of semiconductors and petrochemicals, slumps in Korea’s major industries such as automobiles and ships, and the escalation of the US-China trade war in the second half of this year.
The Korea International Trade Association (KITA) also forecast that Korea’s annual export growth to reach 5.5% this year as it would decline from 6.4% in the first half to 4.6% in the second half of this year. The 5.5% growth rate is about one third of the 15.8% growth posted in 2017.