Another Challenge Waiting

 

Korea’s efforts for the promotion of the materials and components industry are paying off. Still, the deterioration of profitability due to foreign exchange and oil price risks and offensives from China and Japan linger. Industry experts stress that the only way out would be market-leading source technology in the end.

The Ministry of Trade, Industry and Energy announced on Oct. 22 that the sector is estimated to record a trade surplus of US$104.7 billion this year, led mainly by the excellent performances of semiconductors, electronics components and materials, auto parts, and new materials. The government had initiated its third four-year plan for the development of the sector last year and is aiming to join the ranks of the world’s top four powerhouses in the industry by 2020.

The plan is working out well for now. In the semiconductor industry, Samsung Electronics and SK Hynix have earned record profits to lead the global memory semiconductor market. Hyundai Mobis increased its exports five-fold from US$530 million to US$2.6 billion between 2009 and last year to accelerate the growth of the auto parts sector.

In the new materials industry, Samsung SDI is focusing on both IT and lightweight vehicle materials to increase its sales in Europe to US$400 million. SK Chemicals signed contracts for the supply of polyphenylene sulfide, super-engineering plastic used to reduce the weight of a vehicle, even before the start of the manufacturing process. Hyosung is increasing its presence in the global market with the new material of polyketone and carbon fiber.

Nevertheless, the future business outlook is not entirely bright. China raised its petrochemical component and material self-sufficiency rate from 44.8 percent to 68.8 percent between 2002 and last year, and Japan, on the back of the weak yen, is regaining its leadership in the industry as well. This caused the sales and operating profits of LG Chem’s information electronics materials division to drop by 32.8 percent and 69 percent from the previous year, respectively.

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