Despite the spread of the new coronavirus infection (Corona 19), last year’s exports to the information and communication technology (ICT) sector in Korea were the third ever. Overall exports declined for the second consecutive year, showing good results amid sluggishness. Experts predict that the boom in the ICT field will continue for the time being due to the spread of the non-face-to-face economy brought about by Corona 19.
Last year’s export of 183.6 billion dollars
1H sluggish due to falling DRAM prices
Rebound from June due to the spread of the non-face-to-face economy
The highest amount in history for foundries and storage devices
Protection trade is also expected to boom
ICT export increase or decrease. Graphic = Reporter Kim Kyung-jin [email protected]
The Ministry of Trade, Industry and Energy announced on the 18th that last year’s ICT sector exports increased 3.8% year-on-year to 183.6 billion dollars (approximately 202.93 billion billion won). It is the third-largest amount ever since 2018 (US$ 220.3 billion) and 2017 (US$ 1976 billion) when there were’semiconductor supercycles (a period of booming due to a significant increase in semiconductor sales)’. Last year, the trade balance in the ICT sector was estimated to be a surplus of 71 billion dollars (about 78.46 trillion won).
Compared to the previous year, the strong ICT exports last year were a dramatic reversal. ICT exports in 2019 were sluggish throughout the year due to the fall in prices of semiconductor DRAM, the flagship product. In addition, the trade conflict between the US and China and the reverse base effect in 2018 resulted in a double-digit (-19.7%) decrease in exports.
Increase or decrease in exports by ICT item. Graphic = Reporter Kim Kyung-jin [email protected]
The biggest reason for the strong ICT exports last year is the spread of the non-face-to-face economy brought by Corona 19. As the number of hours at home increased, demand for ICT related to non-face-to-face industries such as online shopping and telecommuting increased a lot. In fact, in the first half of last year, just after the spread of Corona 19, ICT exports decreased by 2.8% compared to the same period last year due to the effects of border closures. However, since June of last year, when the non-face-to-face economy began to spread in earnest, ICT exports increased for seven consecutive months. Companies have also greatly increased their investments in large data centers and 5G infrastructure. Thanks to this, last year’s semiconductor exports (5.4%) recovered from sluggishness in 2019. Exports of computers and peripherals (53.1%) also surged due to the spread of homework. In particular, as sales of PCs such as laptops increased, sales of solid state drives (SSDs), a high-speed auxiliary memory device, increased 101.5% compared to the previous year.
Last year, ICT exports improved not only in quantity but also in quality. In particular, high value-added items and future new industry items were good. First of all, system semiconductors, a new food, recorded the highest exports (30.3 billion dollars) last year, centered on foundries (consigned semiconductor production). Organic light-emitting diodes (OLED) also surpassed 10 billion dollars in exports for the third consecutive year. SSD exports hit record highs, and MCP (multi-chip package, 14.1%) exports also increased significantly.
However, there are many obstacles to overcome even in such export propaganda. First of all, the trend of strengthening protection trade that is growing after Corona 19 is burdensome. In particular, in recent years, instead of the global value chain (GVC) where countries around the world produce products through division of labor, the trend of the regional value chain (RVC), where only trusted countries in the region trade with each other, is strengthening. In this situation, concerns arise that if the trade conflict between the US and China, which had been quiet after Corona 19, re-emerges in earnest, it could be a major blow to the Korean economy. Sang-Bong Kim, professor of economics at Hansung University, said, “For the time being, exports will continue, mainly in the ICT industry, but changes in the trade environment can act as a burden.” You have to set up your strategy well so that you can,” he advised.
Sejong = Reporter Kim Namjun [email protected]