Last Year Semiconductor Exports Down 25%... ICT Exports Down 20% and Trade Balance Down 40%

The South Korean Information and Communication Technology (ICT) industry urgently needs to build momentum.

[Asia Economy Reporter Moon Chaeseok] Last year, the export volume of Information and Communication Technology (ICT) shrank by 20% compared to the previous year. The trade surplus also narrowed by 40%. The decline in semiconductor exports, which fell below the $100 billion mark after a year, was a key factor in the overall export decrease.

The Ministry of Trade, Industry and Energy and the Ministry of Science and ICT announced on the 20th that last year's export volume was recorded at $176.9 billion, down 19.7% from $220.4 billion the previous year.

Although it ranked third all-time, exports had increased by 21.6% in 2017 and 11.5% in 2018 before turning downward last year.

By quarter, exports decreased by 17.9% in Q1, 18.9% in Q2, 22.9% in Q3, and 18.7% in Q4. The narrowing of the quarterly export decline rate was influenced by the reduced monthly export decline rate of semiconductors starting in October.

The semiconductor export decline rate narrowed from -32.1% in October to -30.7% in November and -17.6% in December, due to the DRAM spot price (4Gb standard) falling from $1.91 in September to $1.79 in October, then rising again to $1.69 in November and $1.70 in December.

Semiconductor export value stood at $95.16 billion, a 25.7% decrease from $128.15 billion a year earlier. This was even lower than the $99.67 billion recorded in 2017.

In 2018, memory and system semiconductors simultaneously achieved their highest export values, marking the first time a single item surpassed $120 billion, but the $100 billion level was relinquished after just one year.

Memory semiconductors remained at $63 billion due to price drops caused by decreased demand from data centers and smartphones, combined with export base effects.

In 2018, memory semiconductors recorded a historic high of $94.08 billion but experienced a 33% decline. While the growth rate was 40.1% in 2018, the entire increase was lost last year.

System semiconductors also declined by 2.9% to $25.7 billion from $26.47 billion a year earlier due to worsening market conditions.

However, by quarterly year-over-year growth rates, Q1 was -7.4%, Q2 -8.2%, turning positive in Q3 at 1.2% and Q4 at 2.5%. The government explained that foundry growth was notably clear.

Displays, mobile phones, computers, and peripherals also struggled. Display exports fell 21.3% to $21.84 billion from $27.76 billion a year earlier. In 2018, they had already decreased by 8.4%, indicating worsening performance.

LCD panels dropped by 42% due to price declines caused by large panel production from Chinese competitors. OLED panels also stagnated, recording a slight 0.5% decrease year-over-year.

Mobile phone exports also retreated, falling 17.8% to $12 billion from $14.61 billion the previous year. The decline continued due to global smartphone growth slowdown, increased overseas production, and delayed smartphone replacement. Finished products decreased by 22.5% to $4.74 billion, and parts fell 14.4% to $7.25 billion.

Quarterly export decline rates were -27.3% in Q1, -20.6% in Q2, and -18.2% in Q3, with a smaller decline of -3.7% in Q4. The government emphasized the significance of domestic companies' global smartphone market share rising slightly to 23.9% in Q3 last year from 23.1% a year earlier.

Computer and peripherals exports stood at $9.09 billion, down 19.3% from the previous year. The government explained that while computer exports remained strong, peripherals such as solid-state drives (SSD) experienced poor performance, resulting in double-digit declines.

By region, China (including Hong Kong), the largest ICT export market accounting for 49.1% of total exports, saw exports fall 27.3% to $86.78 billion from a year earlier. The government noted that, as in 2018, mobile phones and displays faced intensified competition from local companies, leading to continued declines.

However, semiconductor exports to China also fell 30.5% to $59.62 billion last year, whereas in 2018 they had increased 14.4% year-over-year, reaching a record high.

Other major export countries included Vietnam, with exports down 2.6% to $27.16 billion, and the United States, down 10.5% to $18.38 billion.

Meanwhile, last year's ICT imports rose 1.2% to $108.37 billion from $107.12 billion the previous year. Semiconductor imports increased by 5.5%, while displays (-38.4%), computers and peripherals (-10.5%), and mobile phones (-1%) all declined. Imports from Vietnam (14.8%), China (0.5%), and the United States (0.2%) increased, while imports from Japan decreased by 7.8%.

As a result, last year's ICT trade surplus was preliminarily estimated at $68.52 billion, down 39.5% from the record $113.28 billion surplus in 2018. The government explained that although secondary batteries increased, the decline in exports of semiconductors, displays, and mobile phones led to the reduced ICT trade surplus.

By country, the largest trade surplus was with China (including Hong Kong) at $40.6 billion, followed by Vietnam ($17.34 billion), the United States ($9.73 billion), and the European Union ($3.77 billion).

This content was produced with the assistance of AI translation services.