Samjeong KPMG "12 Sectors Including Game and Media Clear Next Year... Construction and Securities Cloudy"

2023 Domestic Major Industry Outlook Report
Some Positive Prospects for 12 Industries

[Asia Economy Reporter Lee Seon-ae] Despite the expanding economic uncertainties next year, some industry-specific demand is expected to slightly improve in the second half of the year due to recovery from the endemic (periodic outbreaks of infectious diseases) and environmental changes such as market expansion.

On the 21st, Samjong KPMG presented forecasts and response strategies for 23 major domestic industries including semiconductors, displays, mobile phones, automobiles, and steel in its report titled ‘2023 Domestic Major Industry Outlook.’

It forecasted positive prospects for 12 industries including mobile phones, automobiles, petroleum & chemicals, energy & utilities, pharmaceuticals & bio, aviation, tourism, games, media & entertainment, distribution, cosmetics, and non-life insurance.

In the relatively low economic sensitivity game industry, new major titles from leading domestic game companies are scheduled for release. Additionally, game companies holding existing global popular game intellectual properties (IPs) are expected to launch AAA-grade games developed with large-scale capital investment, anticipating global success and market expansion. Samjong KPMG expects the domestic game industry platform to diversify further as major domestic game companies actively target overseas markets by releasing console games. With anticipated moves toward revenue diversification through expanding genre diversity such as demand for subculture games, it urged the need to consider investments and mergers & acquisitions (M&A) to expand platform, regional, and genre diversity.

The media & entertainment industry is somewhat affected by weakened consumer sentiment due to the economic downturn; however, with the continued global success of domestic content, exports of content IP and investments are expected to steadily increase. The report advised efforts such as forming local partnerships to establish systems for discovering and producing locally customized content IP, and strengthening the company’s information and communication technology (ICT) capabilities and fandom-building and management skills for content IP to expand into other industries.

The mobile phone market size in 2023 is expected to slightly expand due to the base effect from the previous year. Particularly, some major negative factors caused by the COVID-19 pandemic and geopolitical risks are expected to ease, and market growth is anticipated supported by the launch of new products such as foldable smartphones and wearable devices. It emphasized the establishment of supply strategies targeting expanding key markets such as China.

Domestic energy demand, which had slowed due to COVID-19, is showing a rapid recovery and is predicted to increase for the second consecutive year by 2.2% compared to the previous year. The effects of the government’s strong promotion policies and the entry of new facilities will lead renewable energy and nuclear power to drive the increase in total energy consumption, while gas demand is expected to slightly decrease due to unprecedentedly high prices. The report emphasized the need for active investment review in next-generation nuclear power projects and securing energy supply stability through diversification of gas import countries.

The non-life insurance industry, which had some negative outlooks in 2022 due to rising loss ratios expected from the resumption of economic activities after the COVID-19 pandemic, is seeing improved profitability as loss ratios decline due to extended social distancing. The report forecasts that the general non-life insurance industry will maintain growth next year through expanded coverage of new risks. However, it noted the need for soundness management and effective channel utilization in digital environments as non-performing assets and delinquencies are expected due to economic slowdown and competition intensifies.

In the low-growth economic recession trend, nine industries including semiconductors, displays, steel, shipbuilding & shipping, food & dining, fashion, banking, credit cards, and life insurance are expected to face some negative outlooks, while construction and securities industries are diagnosed with negative prospects.

According to the World Semiconductor Trade Statistics (WSTS), the global semiconductor market in 2023 is expected to be $556.6 billion with a growth rate of -4.1%, and memory semiconductors are expected to shrink by -17.0% year-on-year due to difficulties in resolving oversupply. Especially, the Asia-Pacific region is expected to be significantly affected by the market size decline, prompting the need for redesigning the Global Value Chain (GVC) in line with global environmental changes and risk management through monitoring major countries’ semiconductor promotion policies.

The display industry is expected to see only slight global market size expansion in 2023, following the downcycle in 2022 and looking toward the endemic. Domestic display companies have shown trends of withdrawal or reduction in the LCD market and are expected to accelerate the development of next-generation innovative displays. The report emphasized establishing new competitive strategies such as advancing OLED technology and premium display lineups, and expanding supply chains to multiple global companies to strengthen stability.

Domestic construction orders in 2022 reached a record high of 223.5 trillion KRW, but in 2023, unfavorable market conditions such as more than a 10% reduction in government SOC budgets and rising procurement interest rates are expected to shift the domestic construction industry into a downturn phase. The report suggested expanding investments in collaborative digital processes such as BIM (Building Information Modeling) and cloud for survival in the global construction market, along with securing advanced competitiveness in transitioning to eco-friendly and low-carbon industrial infrastructure.

Samjong KPMG Economic Research Institute stated, “Despite global extreme uncertainties, there remains potential for recovery in 2023 due to improvements in supply chain and raw material supply instabilities and some pending demand in certain industries,” adding, “Domestic companies should closely monitor industry-specific policy changes and consider means to secure competitiveness such as targeting global markets, strengthening digital strategies, and establishing ESG (Environmental, Social, and Governance) strategies.”

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