"IT, Information Services, and Semiconductors Will Perform Well Next Year"

Hana Financial Research Institute Announces '2021 Industry Outlook'

[Asia Economy Reporter Kim Min-young] Next year, South Korea's economy is expected to improve in IT and equipment manufacturing, information services, and the semiconductor industry.

Hana Financial Management Research Institute, affiliated with Hana Bank, announced the '2021 Industry Outlook' on the 7th, diagnosing the 'Future of Korean Industry in the Post-COVID Era.'

2021 Expected to Recover Centered on IT and Equipment Manufacturing

The institute predicted that domestic major industries will recover together, supported by increased government investment and easing of lockdowns in major countries. The IT manufacturing sector, sensitive to economic cycles, is expected to lead the recovery, with notable growth in non-face-to-face (untact), digital, and low-carbon industries. However, the recovery strength of manufacturing is expected to be differentiated, as traditional key manufacturing sectors such as automobiles, shipbuilding, and steel may not regain last year's production levels.

Economic Cycles of 7 out of 12 Industries Expected to Improve Compared to This Year

The institute stated that among the 12 analyzed industries, the economic cycles of 7 industries such as semiconductors (recovery → stabilization), mobile phones, automobiles, shipbuilding, retail distribution (slowdown → recovery), and steel, petrochemicals (recession → recovery) are expected to improve compared to this year.

On the other hand, the economic cycles of 5 industries including secondary batteries and information services (boom), food and beverages (stable), refining and construction (recession) are expected to remain the same as this year. There are no industries expected to experience a worsening economic cycle compared to this year.

The institute particularly viewed the prospects of the secondary battery manufacturing industry, information services industry, and semiconductor manufacturing industry benefiting from untact positively.

Regarding secondary battery manufacturing, it analyzed that domestic companies are increasing their market share through overseas market expansion in Europe and other regions, supplying new automobile companies, and increasing production capacity. Due to the scale economy effect from the expansion of electric vehicle (EV) battery adoption and favorable global market position, domestic secondary battery companies' sales are expected to increase by more than 30% in 2021.

The information services industry, represented by Naver and Kakao, is expected to continue high growth as expansion into other businesses such as commerce, payment, and content progresses based on dominance in platform areas like search and messenger. However, concerns about the strengthening influence of monopolistic platforms may increase policy risks.

Researcher Shin Seok-young, in charge of the semiconductor industry, explained, "Although the US-China conflict is a risk factor, the simultaneous demand recovery in memory (laptop and server demand) and non-memory (foundry demand) sectors, along with appropriate supply adjustments, is expected to lead to simultaneous growth in sales and profits for domestic semiconductor companies."

Three Key Points to Note in the Post-COVID Era

The institute suggested that in the post-COVID era, attention should be paid to expanded government investment, the spread of economic nationalism, and accelerated changes in the industrial ecosystem.

The institute predicted that due to prolonged COVID-related uncertainties and poor corporate performance, private sector investment including corporate investment will be limited. It expects the government's active investment for economic recovery and employment expansion to continue next year. In particular, through the Korean New Deal policy, the fostering of the 4th industrial revolution for the transition to a digital economy is expected to be in full swing.

Furthermore, it diagnosed that the COVID-19 pandemic highlighted vulnerabilities in global supply chains and severely contracted major economies, leading to a worldwide trend toward self-reliance. Countries are expected to expand economic nationalism by imposing export-import restrictions, reshoring, and strengthening foreign investment reviews, citing reasons such as strengthening production security and protecting domestic industries.

Kim Young-jun, head of the Industry Analysis Team, stated, "If companies fall behind in the rapidly progressing changes in the industrial ecosystem, their survival will be uncertain." He added, "Industries severely impacted by COVID-19 such as refining, shipping, offline distribution, and automobile manufacturing facing the electric vehicle transition issue are highly likely to undergo industrial restructuring."

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