Semiconductor Slump Leads to 7 Consecutive Months of Export Decline... Trade Balance in Deficit for 14 Months (Comprehensive)

Due to sluggish semiconductor and exports to China, South Korea's trade deficit has continued for 14 consecutive months from March last year to last month. In particular, exports of the key item semiconductor plummeted by more than 40%, indicating a long-term delay in export recovery.

According to the "April Export-Import Trends" announced by the Ministry of Trade, Industry and Energy on the 1st, the trade balance recorded a deficit of $2.62 billion last month. During the same period, exports (provisional customs clearance basis) amounted to $49.62 billion, down 14.2% year-on-year, and imports were $52.23 billion, down 13.3%. The number of working days last month was 22.5 days, one day less than the same period last year (23.5 days). Considering the number of working days, the average daily export amount was $2.21 billion, down 10.4%.

Exports have continued a negative trend for seven consecutive months from October last year to last month. The last time exports decreased for more than seven consecutive months on a monthly basis was from December 2018 to January 2020. The Ministry of Trade, Industry and Energy analyzed, "The decrease was due to delayed global economic recovery, sluggish semiconductor market conditions, reduced working days, and a base effect from last April's record high export performance ($57.8 billion) in April. The slowdown in import demand from China and Vietnam mainly affected the decrease in exports to China and ASEAN."

Semiconductor DRAM Fixed Price Plummets 20%

The prolonged trade deficit for over a year is mainly attributed to sluggish exports of the key item, semiconductors. Semiconductor exports last month plunged 41.0% year-on-year, marking nine consecutive months of decline. According to market research firm DRAMeXchange, the average fixed transaction price of PC DRAM general-purpose products (DDR4 8Gb) last month was $1.45, down 19.89% from the previous month. DRAM prices fell sharply by 18.1% in January this year and then further widened the decline. As a result, Samsung Electronics recorded a quarterly deficit of 4.58 trillion won in the semiconductor sector in Q1 this year, the first quarterly loss in 14 years since Q1 2009.

This year, product prices such as DRAM have plummeted, leading to a significant decline in exports. Semiconductor exports have continued to decrease by around 40% from January (-44.5%), February (-42.5%), March (-34.5%), to this month. The Ministry of Trade, Industry and Energy stated, "Short-term improvement in the semiconductor market is expected to be difficult, but we anticipate market improvement after the third quarter due to supply reduction effects from major memory companies' production cuts."

Exports of IT items including semiconductors and displays (-29.3%), petroleum products (-27.3%), petrochemicals (-23.8%), and steel (-10.7%) also decreased. However, exports of automobiles (40.3%), ships (59.2%), and general machinery (8.1%) increased, reducing the overall decline. By region, exports to the European Union (EU, 9.9%) and the Middle East (30.7%) achieved positive growth due to strong automobile exports and increased exports of general machinery closely related to infrastructure investment. However, exports to China and ASEAN, where semiconductor export shares are high, decreased by 26.5% and 26.3%, respectively. This is interpreted as a slowdown in import demand from China and Vietnam due to delayed global economic recovery. In particular, the trade balance with China, the largest trading partner, has recorded a deficit for 11 consecutive months.

Annual Trade Deficit of $25 Billion... 53% of Last Year’s Level in Four Months

During the same period, imports decreased by 13.3% overall as the three major energy imports?crude oil (-30.1%), gas (-15.5%), and coal (-21.1%)?fell by 25.8% due to lower oil prices. Dubai crude oil prices dropped from $102.82 per barrel in April last year to $83.44 this month. The scale of energy imports remains a concern as it is still $1.9 billion higher than the past 10-year average ($9 billion). Imports of raw and subsidiary materials such as semiconductors and steel also continued to decline.

The cumulative export amount for this year is $201.159 billion, down 13% compared to the same period last year, and imports are $226.221 billion, down 5%. Accordingly, the annual trade balance this year recorded a deficit of $25.062 billion. This amount corresponds to 53.0% of last year's total trade deficit (-$47.2 billion) in just four months this year.

The government plans to implement strong export support measures. The government emphasized, "We will actively support the creation of business opportunities and market development so that the achievements of the recent Korea-US summit and the Korea-US Business Roundtable during the US visit can lead to export expansion. In the mid to long term, we will strengthen the fundamental competitiveness of our export industries by investing in technology development for semiconductors, establishing specialized advanced strategic industrial complexes, expanding investment tax credits, and promoting diversification and high value-added export items and markets."

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