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High-tech exports suffer 11th month of declines

Oct 22,2019
Korea’s high-tech exports declined for the 11th straight month as the local semiconductor industry struggles with sluggish prices and demand.

According to the Ministry of Trade, Industry and Energy on Monday, Korea’s information and communication technology (ICT) exports fell 22 percent to $15.8 billion in September from $20.3 billion the previous year.

The Trade Ministry said that the fall last month was caused by a 31.5 percent drop in semiconductor exports to $8.6 billion.

Semiconductors are Korea’s top export and a key indicator for its trade performance. Exports of the product accounted for 19 percent of total exports and more than half of ICT exports last month.

The government cited steep price drops in memory chips last month. The price of a single 4-gigabyte DRAM chip dropped nearly 50 percent last month to $1.91 from $3.70 a year earlier, leading to a 47.5 percent drop in DRAM chip exports.

It also blamed reduced demand from its largest trading partner, China, as overall ICT exports to that country declined 33.1 percent. Semiconductor exports to the country declined 38.6 percent last month to $5.3 billion from the previous year.

Although memory chip exports remain disappointing, outbound shipments of non-memory system semiconductors rose 6.6 percent last month to $2.4 billion, ending a 10-month streak of on-year declines.

Memory chip prices have also firmed up a bit in recent months, after reaching a low of $1.82 per 4-gigabyte DRAM chip in June. Analysts expect trade to improve as demand for memory chips grows next year with the introduction of 5G smartphones.

“Forecasts for global 5G smartphone demand next year have grown a lot to around 250 million units from expectations three months ago of 50 million units,” said Choi Do-yeon, an analyst at Shinhan Investment, in a report.

“DRAM prices will rise sharply from the first half of next year,” he said, “due to supply shortages.”

The overall export slump, however, is set to continue this month.

The Korea Customs Service reported Monday that exports this month through Oct. 20 fell 19.5 percent compared to the previous year. Semiconductor exports fell 28.8 percent, leading to pessimism over growth.

Minister of Economy and Finance Hong Nam-ki said last week that Korea’s growth will be in line with an outlook from the International Monetary Fund at 2.0 percent.

BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr]