March Semiconductor Exports Decline Due to Reduced Memory... Industry Says "Non-Memory Market Also Shrinks Due to COVID-19"

ICT exports in March reached $16 billion, up 1.1% YoY
Exports to China turned positive after 16 months but fell back to negative
Due to semiconductor slowdown... decline in memory semiconductor demand
Memory expansion and non-memory contraction expected due to COVID-19... "Q2 will be challenging"

[Asia Economy Reporter Moon Chaeseok] Last month, South Korea's information and communication technology (ICT) exports increased for the second consecutive month, driven by strong mobile phone sales. However, semiconductor exports shrank due to reduced demand for memory semiconductors. The market expects that the non-memory semiconductor market will shrink in the long term due to the novel coronavirus disease (COVID-19), leading to predictions that exports after the second quarter will face challenges.

On the 13th, the Ministry of Trade, Industry and Energy announced that last month's ICT export value was $16 billion, up 1.1% compared to the same month last year. ICT exports turned positive for the first time in 16 months since November 2018's -1.7% in February and increased for two consecutive months.

The growth was led by mobile phones. Mobile phone exports rose 11.3% year-on-year to $1.02 billion. This was due to simultaneous increases in finished products and parts, thanks to Samsung Electronics' launch of premium smartphones such as the Galaxy Z Flip and Galaxy S20 Premium.

Semiconductor exports slightly declined, down 2.7% year-on-year to $8.87 billion. This was due to a slowdown in demand for memory used in smartphones and PCs.

System semiconductors increased 32.9% year-on-year to $2.66 billion. The expansion of foundry and fabless demand was cited as the reason for the performance increase.

The unit price of NAND flash (64Gb) also rose for four consecutive months. It increased from $2.35 in December last year to $2.46 in January, $2.56 in February, and $2.61 in March this year.

Whether this upward trend will continue into the second quarter remains uncertain. Due to COVID-19, the non-memory semiconductor market, which accounts for 70% of the global semiconductor market, is expected to shrink by 6.1% this year. This is unfavorable news even for Samsung Electronics' 'Vision 2030,' which aims to become the world's number one in the non-memory semiconductor market by 2030.

According to the industry on the 12th, market research firm Gartner recently forecasted in a report that global semiconductor sales will record $415.4 billion (approximately 502 trillion KRW) this year, a 0.9% decline from the previous year. While the memory semiconductor market is expected to expand by 13.9%, the non-memory market size is expected to shrink.

Unlike memory semiconductors, which are limited to the server and mobile markets, non-memory semiconductors are used in all electronic products. Therefore, they generally move according to the global economic trend. This means they could be directly hit by COVID-19. Conversely, due to increased untact consumption thanks to COVID-19, the server market is rapidly growing, which could help memory semiconductor exports recover.

Display exports decreased 4.4% year-on-year to $1.64 billion, as demand for organic light-emitting diode (OLED) panels used in smartphones increased, but production of liquid crystal display (LCD) panels was adjusted due to oversupply from China.

China (including Hong Kong), the largest export destination accounting for 47.7% of South Korea's exports, recorded $7.63 billion, down 5.6% year-on-year. This was due to declines in semiconductors (-8.8%) and displays (-11.5%). After turning positive for the first time in 16 months in February, it returned to negative territory.

Exports to Vietnam increased 7.9% to $2.45 billion. Exports to the United States rose 16.8% year-on-year to $1.98 billion. Exports to the European Union (EU) decreased 1.2% year-on-year to $940 million.

Exports to Japan increased 18.9% to $410 million, driven by a recovery in computers, peripherals, and secondary batteries.

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