Top 10 Domestic Companies Rise Abroad Overcoming COVID-19... But the Second Half Remains 'Uncertain'

[Asia Economy Reporter Jeong Hyunjin] Overseas operations of South Korea's top 10 domestic companies, which had stalled due to the impact of COVID-19, successfully turned the tide in the first half of this year. Although the scale varied by industry, overseas businesses that had been sustained mainly by semiconductors and automobiles after the COVID-19 crisis expanded to steel and petrochemicals, laying the foundation for a turnaround. However, the second half remains uncertain. Recently, issues such as the decline in memory semiconductor prices and the shortage of automotive semiconductors have occurred one after another, increasing uncertainty about overseas sales in the second half for major domestic companies.

On the 3rd, the Korea Economic Research Institute under the Federation of Korean Industries analyzed the half-year reports of the top 10 domestic companies by sales. It found that the overseas sales ratio of these companies in the first half of this year was 67.1%, an increase of 2.3 percentage points compared to the same period last year. In terms of amount, overseas sales rose from KRW 172.3785 trillion in the first half of last year to KRW 221.9509 trillion in the first half of this year, surpassing the KRW 200 trillion mark. The overseas sales of the top 10 companies increased by 28.76% in the first half of this year, exceeding the overall sales growth rate of 25.27%.

The industries leading the overseas sales of the top 10 companies were undoubtedly semiconductors and automobiles. The overseas sales ratio of the top five companies?Samsung Electronics, Hyundai Motor Company, Kia Motors, SK Hynix, and LG Electronics?increased by more than 3 percentage points from 70.7% in the first half of last year to 73.8% in the first half of this year. In particular, the automobile industry, including Hyundai and Kia, stood out. Hyundai Motor Company’s overseas sales ratio increased by 5.4 percentage points compared to the first half of last year, and Kia’s overseas sales ratio also rose by 4.7 percentage points during the same period, exceeding the average expansion rate.

The improvement in overseas performance of POSCO, a steel industry company, was also notable. POSCO’s overseas sales ratio in the first half of this year was 64.2%, expanding by 5.5 percentage points in one year.

The increase in overseas sales of major domestic companies in the first half of this year is largely due to the base effect from the first half of last year, which was hit hard by COVID-19, and the pent-up demand phenomenon. Samsung Electronics and SK Hynix saw a significant increase in sales of memory semiconductors due to the expansion of semiconductor demand that began at the end of last year. Despite the global shortage of automotive semiconductors, automobile companies such as Hyundai and Kia showed a recovery in sales as major overseas markets like the United States and Europe, which were severely affected by COVID-19 in the first half of last year, revived. As a result, South Korea’s exports in the first half of this year exceeded $300 billion for the first time ever, setting a record high.

However, concerns remain for the second half. Warning signs are being detected in the semiconductor and automobile markets, which are the pillars of the Korean economy. The market outlook for D-RAM, a memory semiconductor mainly produced by Samsung Electronics and SK Hynix, is deteriorating. Although the industry refutes this as ‘excessive concern,’ the market expects that falling prices due to reduced PC demand will affect semiconductor companies’ performance. Hyundai Motor Company also saw a decrease in sales in August due to the semiconductor supply shortage. This is the first time this year that Hyundai’s monthly sales volume has turned negative.

An industry official said, "There are still factors causing uncertainty, such as the spread of COVID-19 variants, semiconductor supply shortages, and supply chain disruptions like factory shutdowns, so major companies are closely monitoring the situation."

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