Korea’s reliance on semiconductor chips increases economic vulnerability: FKI
Jeong-soo Hwang
Aug 12, 2020 (Gmt+09:00)
South Korea’s heavy dependence on semiconductor chips and its concentration on the US and China for exports pose a greater risk to the export-oriented economy amid ongoing tension between the US and China, a lobby group for the country’s top conglomerates said on August 12. In addition, heated competition with China in the top export markets will likely aggravate South Korea's export prospects given their overlapping shipment markets, the Federation of Korean Industries (FKI) said in a recent analysis report.
“Deepening competition with China, which has been implementing policies supportive of the high-tech manufacturing industry, may further worsen South Korea’s export conditions,” FKI said in the report. China has outpaced South Korea in major export items, excluding automobiles, in terms of market share.
The report was released after the world’s seventh-biggest exporter posted year-on-year shipment declines for the past five months, from March when the World Health Organization declared Covid-19 a pandemic, through July.
Even last year, before the coronavirus outbreak, Korea’s exports tumbled by 13.8% from March to July 2019 from the same period of 2018.
Korea's concentration on its 10 largest export markets came to 70.3%, based on 2019 trade data. It had the third-highest degree of concentration after Hong Kong and Japan and compared with the average 65.3% among the 10 exporting countries.
In particular, the five biggest export countries took a 59% share, with China and the US accounting for 25.1% and 13.5%, respectively.
LITTLE CHANGE IN EXPORT ITEMS
“South Korea’s export items have remained almost the same for the past 10 years. The absence of a new growth engine to drive the fourth industrial revolution and the post-coronavirus era will pose a great threat to our export competitiveness,” said a senior FKI official.