Export and import cargo containers are stacked at Busan Port, Dec. 1. Yonhap
Korea’s export progress is more and more depending on semiconductors, deepening polarization within the export construction regardless of will increase in whole outbound shipments, information confirmed Sunday.
Though the nation is on monitor to see its exports exceed $700 billion for the primary time this 12 months, sturdy efficiency in a restricted variety of sectors has masked widespread weak spot throughout the broader export base, the place many industries are slipping into a chronic downturn.
In line with the Ministry of Commerce, Business and Assets, solely 5 of Korea’s 15 flagship export objects posted year-on-year progress in the course of the January-November interval, when outbound shipments totaled $640.2 billion, a 2.9 p.c year-on-year enhance.
Among the many 5 sectors, significant features had been largely confined to semiconductors, ships and biohealth, which rose 19.8 p.c, 28.6 p.c and seven p.c, respectively. Against this, vehicles and computer systems posted solely marginal will increase of two p.c and 0.4 p.c, respectively.
Exports within the 10 different sectors contracted at an alarming tempo, every recording clear year-on-year declines. Shipments of normal equipment fell 8.9 p.c, petroleum merchandise 11.1 p.c, petrochemicals 11.7 p.c and metal 8.8 p.c. Shows additionally slid 10.3 p.c, whereas textiles dropped 8.1 p.c, house home equipment 9.4 p.c and secondary batteries 11.8 p.c.
Particularly, the weak spot in equipment, metal, petrochemicals and secondary batteries was attributed to eroding competitiveness within the face of China’s industrial growth and aggressive low-cost competitors.
Semiconductors, in contrast, are having fun with a historic upswing fueled by the worldwide increase in synthetic intelligence (AI). Demand has surged alongside elevated funding in AI servers and information facilities, signaling the onset of a supercycle.
Chip exports reached a report $152.6 billion by way of November, accounting for 28.3 p.c of the nation’s whole exports — almost triple their share from the early 2000s.
The rising focus of exports in a single sector is elevating considerations that the semiconductor supercycle, pushed by hovering demand and costs, might not be sustainable in the long run.
President Lee Jae Myung speaks at a briefing on imaginative and prescient and improvement technique for the semiconductor sector on the presidential workplace in Yongsan District, Seoul, Wednesday. Yonhap
Consultants warn that underneath such an imbalanced export construction, any cooling of the semiconductor market might undermine Korea’s financial stability. As a result of semiconductors are extremely delicate to world IT cycles and shifts in AI-related funding, a downturn might have wide-ranging repercussions, weighing concurrently on exports, progress, employment and financial circumstances.
In its financial and business outlook launched Nov. 24, the Korea Institute for Industrial Economics and Commerce stated the semiconductor sector is prone to proceed increasing exports of excessive value-added merchandise reminiscent of high-bandwidth reminiscence subsequent 12 months. Nevertheless, it projected a pointy slowdown in total export progress because of base results and stabilizing demand, with the export progress charge anticipated to fall to 4.7 p.c subsequent 12 months from an estimated 16.6 p.c this 12 months.
“Whereas costs for legacy chips rose extra sharply than anticipated this 12 months, forecasts for subsequent 12 months had been made extra conservatively,” stated Kim Yang-paeng, a senior researcher on the institute. “As AI shifts from training-oriented fashions to inference-focused purposes, semiconductor demand might reasonable.”
The Financial institution of Korea additionally issued a warning in its newest evaluation of financial circumstances, noting that whereas the AI revolution represents a long-term megatrend, the danger of a pointy market correction can’t be dominated out.
“The present semiconductor increase is a double-edged sword, as heavier reliance on the sector might amplify the impression of any downturn in contrast with previous cycles,” the central financial institution stated.
Ji Man-soo, a senior researcher on the Korea Institute of Finance, careworn that Korean corporations should undertake sector-specific methods as China’s low-cost push persists.
“Shopper items makers want to obviously differentiate their merchandise from Chinese language rivals by way of high quality and branding, whereas corporations in capital items and intermediate supplies ought to prioritize secure buyer relationships by leveraging provide chain interdependence reasonably than competing solely on worth,” he stated.
