Exports fail to shine, but chip recovery on the horizon

Korea's chip export will rebound from the fourth quarter this year, according to the Korea International Trade Association (KITA) on Monday.

From left, Cho Sang-hyeon, the head of KITA's Institute for International Trade, and Jeong Marn-ki, KITA's executive vice chairman, speak at the press briefing at KITA's headquarters in southern Seoul on Monday. [KITA]

Korea's chip export will rebound from the fourth quarter this year, according to the Korea International Trade Association (KITA) on Monday.

From January to Aug. 20, Korea logged a trade deficit of $28.4 billion, according to data from KITA on Monday. Exports fell 13.2 percent on year during the same period to $385.3 billion while imports fell 12 percent to $413.7 billion.

Sluggish exports in the first half of this year are attributed to a drop in prices. The price and volume of export items both fell for two consecutive quarters from the fourth quarter of 2022.

The volume of exports rose 1.2 percent on year from the second quarter this year, while export prices fell 14.3 percent due to a tumble in the price of oil and semiconductors.

The resumption of offline activities as the Covid-19 pandemic dwindled has led to a plummet in demand for IT products, while demand and supply for automobiles surged.

Electronic products, such as chips, computers, displays, wireless communication devices and household products contributed to 76.9 percent of the decrease of the overall export figure in the first half of this year.

China accounts for the largest share in Korea’s chip export, taking up 40.3 percent, or $52.1 billion in 2022, followed by Vietnam with 12.6 percent and the United States with 6.3 percent.

From January to July, chip export to China tumbled 40.4 percent to $19.7 billion compared to the year before during the same period. The figure fell 31 percent to $6.6 billion for Vietnam, and plunged 62.8 percent to $2 billion for the United States.

“The slowdown in exports is impacted by falling global demand for electronic products, including chips and displays, from the U.S. and European market,” said KITA’s vice chairman Jeong Marn-ki at a press briefing in southern Seoul on Monday. “Dwindling exports to China and Vietnam also contributed to the fall.”

Korea’s share of the global export market fell to 2.62 percent for the first half of this year, the lowest in over two decades since 2008’s 2.61 percent.

However, KITA forecasts a brighter outlook for the chip industry as demand recovers next year.

“Demand for chips which go into making IT products will improve from the fourth quarter this year,” Jeong said. “Demand for high-end memory chips such as high bandwidth memory [HBM] and graphics processing units will grow due to the worldwide deployment of AI services.”

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]