"Next Year Semiconductor, Steel, and Machinery Outlook 'Clear'... Shipbuilding and Automobile 'Cloudy'"

Overall Demand Growth Trend
Impact of Automobiles and Vehicle Semiconductors
Shipbuilding, Mitigation of COVID-19 Base Effect

[Asia Economy Reporter Ki-min Lee] Next year, the semiconductor, steel, and machinery industries are expected to maintain solid business conditions due to increased global demand, while the automotive and shipbuilding sectors are projected to see some decline in performance.

According to the Korea Industrial Alliance Forum (KIAF) on the 22nd, the semiconductor sector, a major manufacturing field accounting for 19.7% of domestic exports this year, is expected to improve compared to this year due to favorable factors such as increased demand for non-face-to-face services and smartphones. From January to November this year, cumulative semiconductor exports reached $115.2 billion, marking the second-highest record after $117.9 billion achieved during the same period in 2018.

However, An Ki-hyun, Executive Director of the Semiconductor Industry Association, pointed out, "Next year, macroeconomic changes are expected due to the reduction of expansionary fiscal policy," adding, "For Korea to continue leading the semiconductor market, the introduction of a Semiconductor Special Act and tax credit system is urgently needed."

[Image source=Yonhap News]

On the other hand, in the automotive sector, the impact of vehicle semiconductor supply shortages is expected to continue until after the second quarter of next year, leading to a sustained decrease in production volume. In particular, protectionism, represented by the US-China trade conflict, is rapidly spreading, increasing the likelihood of disruptions in investment and sales.

The shipbuilding sector is also expected to be affected as the COVID-19 base effect partially diminishes and R&D investment increases to prepare for digitalization such as smart ship data platforms. Jung Seok-ju, Managing Director of the Korea Shipbuilding & Offshore Plant Association, stated, "There is a possibility of reduced order volumes compared to this year, and due to decreased actual wages under the 52-hour workweek system, the outflow of skilled workers is expected to continue," appealing, "Special extended working hours should be recognized."

The steel industry is projected to see global market demand grow by about 2.2% due to increased demand in advanced and emerging markets. However, domestic companies are expected to incur sunk costs due to large-scale R&D investments and facility conversions driven by carbon neutrality policies, highlighting the need for government-level support fund formation and improvements to the emissions trading system.

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