Mid-September Exports Up 3.6% 'Briefly'... "US-China Conflict Hits Semiconductors" (Summary)

Korea Customs Service Announces Export-Import Status from September 1-20
Semiconductors Up 25.3%, Passenger Cars Up 38.8%
Operating Days Increased by Two, Turning Positive After Six Months
"Fundamental Supply Chain Measures Needed for China-Dependent Semiconductors"

[Asia Economy Reporters Kim Bo-kyung and Moon Chae-seok] Due to a rebound in semiconductor and automobile exports, export value from the 1st to the 20th of this month turned positive for the first time in six months. However, the average daily export value, excluding the effect of working days, still recorded a negative growth of -9.8% due to the impact of the novel coronavirus disease (COVID-19). There are also forecasts that external uncertainties such as the US-China trade dispute will negatively affect semiconductor export performance.

According to the "Export and Import Status from September 1 to 20 (provisional customs clearance basis)" announced by the Korea Customs Service on the 21st, exports during this period amounted to $29.6 billion, an increase of 3.6% ($1.02 billion) compared to the same period last year. This is the first time in six months since March (10%) that the export value from the 1st to the 20th of the month, announced monthly by the Korea Customs Service, has increased.

This export rebound is largely due to the effect of working days. The number of working days during this period was 15.5 days, two days more than last year when the Chuseok holiday was included. The number of working days in late September is also expected to be 0.5 days more than last year, raising expectations for an overall export increase this month.

However, the average daily export value during this period was $1.91 billion, a decrease of 9.8% ($200 million) compared to last year. This is analyzed to be due to domestic and external adverse factors such as economic slowdown and weak demand caused by the spread of COVID-19.

An official from the Ministry of Trade, Industry and Energy said, "The average daily export value from September 1 to 20 last year was the highest for that year. The -9.8% reflects a base effect from this," adding, "We need to see the results until the end of the month, but the performance seems likely to be good."

By export item, semiconductors (25.3%), passenger cars (38.8%), and precision instruments (14.7%) increased, while wireless communication devices (-9.1%), petroleum products (-45.6%), and ships (-26.5%) decreased. By country, exports to China (8.7%), the United States (16.1%), Vietnam (5.8%), and the European Union (EU, 9.6%) increased, while exports to Japan (-18.5%) and the Middle East (-12.2%) decreased.

An official from the Ministry of Trade, Industry and Energy explained, "It is difficult to say that both semiconductors and automobiles have recovered to pre-COVID-19 levels, but in the case of automobiles, a positive export performance for the whole of September is expected," adding, "This is because the number of working days and performance are proportional."

However, there are observations that external variables such as the US-China conflict will negatively impact the performance of semiconductors, Korea's top export item. The United States implemented additional sanctions from the 15th, restricting domestic and foreign semiconductor companies from supplying to China's Huawei.

Professor Kim Tae-gi of Dankook University's Department of Economics said, "The most contentious item in the US-China dispute is semiconductors," adding, "Since intermediate goods exports to China have decreased, it is a difficult issue to compensate through exports to the US, Europe, and Japan."

Professor Kim Young-ik of Sogang University's Department of Economics said, "China aims to raise its semiconductor self-sufficiency rate to 70% by 2025 under the 'Made in China 2025' project," and predicted, "This US-China technology war will accelerate China's semiconductor production speed." He emphasized, "It is necessary not only to maintain a corporate super-gap strategy but also to have fundamental supply chain measures."

Meanwhile, imports from the 1st to the 20th of this month amounted to $25.1 billion, a decrease of 6.8% ($1.83 billion) compared to the same period last year. Accordingly, the trade balance recorded a surplus of $4.472 billion.

Looking at major import items, semiconductors (12.6%), machinery (6.8%), and passenger cars (29.5%) increased, while crude oil (-29.2%), precision instruments (-1.7%), and gas (-39.0%) decreased. By country, imports from China (2.5%), the EU (7.1%), and Australia (6.0%) increased, but imports from the US (-5.3%), Japan (-10.3%), the Middle East (-40.7%), and Vietnam (-14.6%) decreased.

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