The Bank of Korea: "Increased Dependence on Korean Semiconductors... Positive Effect on Economic Recovery from COVID-19"

BOK Issue Note 'Assessment of Korea's Economy IT Industry Dependence through Decomposition of Industry Dependence Factors'

[Asia Economy Reporter Eunbyeol Kim] The Bank of Korea has released an analysis showing that the dependence on the semiconductor sector (based on export share) has significantly increased since 2010. The Bank of Korea evaluated this as a result of Korean companies actively responding to changes in the global trade structure with strong competitiveness, which also positively influenced the Korean economy during the post-COVID-19 economic recovery process.

On the 22nd, the Bank of Korea stated in its BOK Issue Note titled "Evaluation of Korea's IT Industry Dependence through Factor Decomposition of Industrial Dependence" that the semiconductor industry's dependence increased by 8.9 percentage points in the 2010s, greatly expanding compared to a decrease of 6.5 percentage points in the 2000s.

In the 2000s, the global trade share of semiconductors declined, leading to a reduction in industrial dependence. However, in the 2010s, semiconductor trade recovered, and continuous facility investment and research and development (R&D) enhanced competitiveness, resulting in increased semiconductor industry dependence.

On the other hand, the export shares of mobile phones and displays significantly shrank in the 2010s due to intensified competition with China and expanded overseas production. The mobile phone industry's dependence shifted from 5.3 percentage points to -4.8 percentage points, and the display industry's dependence turned negative from 8.2 percentage points to -5.8 percentage points during the same period.

The export share of automobiles expanded within the global trade share of automobiles in the 2010s, but the growth margin (1.0 percentage point) narrowed due to declining market shares in major countries and increased overseas production. Despite competitive advantages, the export share of petrochemicals slowed its growth after 2010 as global trade in petrochemical products contracted. The export share of shipbuilding significantly shrank in the 2010s due to a decrease in global trade and weakened competitiveness.

Jae-hyun Park, head of the Bank of Korea's Research Department's Conjunctural Analysis Team, said, "The rise in semiconductor sector dependence (based on export share) since 2010 is the result of Korean companies successfully responding to changes in the global trade structure based on strong competitiveness," adding, "In addition to semiconductors, the export shares of major non-IT industries such as automobiles, petrochemicals, and machinery, as well as new growth industries like batteries and pharmaceuticals, have also expanded."

In particular, Park noted that the market share (sales) of Korean companies in batteries has significantly increased due to continuous R&D investment and improved technological capabilities. As of last year, Korean companies' global market share in batteries was 34.7%. Excluding the Chinese market, the global market share was 52.9%.

Park stated, "The industrial structure positively influenced the Korean economy in line with COVID-19 characteristics such as the activation of non-face-to-face activities (IT), increased demand for health and hygiene products (petrochemicals, pharmaceuticals), and recovery in goods-centered consumption (home appliances, automobiles)."

He also emphasized, "Under the new normal trend symbolized by Big Blur (the phenomenon where boundaries between industries such as AI and big data become blurred), to secure more stable growth engines in the future, it is necessary to foster new technologies and new industries and maximize industrial convergence to strengthen balanced growth among sectors."

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