Next Year's Industry Outlook... Shipbuilding, Construction, and Steel Still 'Cloudy'

On the 22nd, Korea Industrial Federation Forum '2021 Industry Economic Status and Outlook'
Display and Construction Under Attack from Chinese Companies
Display May Lose No.1 Market Share Next Year
Semiconductors, Batteries, and Bio Sectors Outlook 'Clear'

[Asia Economy Reporter Suyeon Woo] With the start of COVID-19 vaccination, the global economy is expected to rebound in a V-shape next year, but the outlook for South Korea's key industries is predicted to vary by sector. While the 4th industrial revolution sectors such as semiconductors, batteries, and bio industries will continue to experience clear skies, heavy and large-scale industries like shipbuilding, construction, and steel are expected to remain under dark clouds next year.

According to the "2021 Industrial Economy Status and Outlook" released on the 22nd by the Korea Industrial Alliance Forum (KIAF), among the 11 major domestic industries, five sectors including shipbuilding, steel, construction, display, and textiles have presented a bleak business outlook for next year.

First, the shipbuilding sector, which experienced a sharp decline in global orders this year due to COVID-19, is expected to face difficulties next year due to weakened investment sentiment. Global orders next year are projected to be 23.8 million CGT and 51.5 billion dollars, showing only a slight improvement compared to this year. The domestic shipbuilding industry is facing intensified global survival competition due to long-term recession-driven industrial restructuring and competition to secure future technologies, while internally experiencing liquidity risks from a sharp drop in orders and delivery delays, visible shortages of work, and difficulties in workforce supply.

Another heavy and large-scale industry, the construction sector, is also seeing a gradual decline in market share as it is being outpaced by China in overseas key markets. While domestic companies have experienced a sluggish trend in overseas orders since 2016, Chinese companies are aggressively increasing their market share in Middle Eastern construction projects. Domestic companies’ overseas construction orders amounted to 30.3 billion dollars up to November this year, a 68% sharp decrease compared to the previous year, and the order situation is expected to remain challenging next year.

The display industry is also facing the possibility that South Korea may lose its position as the "market share leader" next year due to the onslaught of Chinese companies. In recent years, China has aggressively invested in facilities and research and development (R&D), causing severe stagnation in the Korean display industry. Next year, Korea’s display industry is expected to maintain production levels compared to the previous year due to increased OLED exports to Vietnam and reduced LCD production, with exports showing only a slight increase.

On the other hand, major 4th industrial revolution sectors such as semiconductors, batteries, and bio industries are expected to continue their bright outlook next year following this year. Especially, the battery sector, which has gained momentum thanks to the rapidly growing electric vehicle market, is expected to see significant improvement in the mid to long term. The industry expects the global electric vehicle market to grow by 65% compared to the previous year next year, and anticipates a high-speed annual growth rate of over 21% until 2030. As of the third quarter of this year, the combined global market share of Korea’s top three battery companies stands at about 35%, and it is expected to increase further.

The semiconductor industry, leading the "untact (contactless) era," is expected to see a positive business outlook next year as 5G services, delayed by COVID-19, begin in earnest and trends such as remote work and online education take hold. The industry forecasts that Korea’s semiconductor exports will increase by 10% compared to this year, exceeding 100 billion dollars next year.

The automobile sector is also expected to show a double-digit export recovery (23%) next year as pent-up demand suppressed by COVID-19 recovers along with the base effect this year. Due to the impact of COVID-19, Korea rose from 7th to 5th place in the global automobile production ranking this year. The industry has proposed improvements to labor-management related systems and regulations to enhance production flexibility in line with the full-scale export recovery next year.

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