Korean Sept export drop eases as chip sales hit 1-year high

Semiconductor exports to improve on output cuts, higher prices, high-end product demand, says government

Container terminals at the Port of Busan, South Korea (File photo, courtesy of Yonhap)

Han-Shin Park 2

2023-10-02 13:06:56 psh@hankyung.com

Economy

South Korea’s exports slowed their decline in September to their mildest drop amid a yearlong downturn, raising hopes for a recovery in Asia’s fourth-largest economy, as overseas sales of semiconductors touched their highest level in a year with a narrower fall.

Exports dipped 4.4% to $54.7 billion last month from a year earlier, marking the 12th consecutive month of decline, showed data from the Ministry of Trade, Industry and Energy on Sunday. The drop was the smallest loss in the losing streak period starting from October 2022.

Overseas sales of semiconductors, the country’s top export item, skidded 13.6% to $9.9 billion, the largest value since September 2022. The item's exports lost 20.6% in August. South Korea is home to the world’s two biggest memory chipmakers – Samsung Electronics Co. and SK Hynix Inc.

The ministry said better market conditions on output cuts by memory chipmakers, growing demand for high-end products for artificial intelligence servers and launches of new information technology smartphones contributed to improving semiconductor exports.

“Supply and demand conditions are expected to gradually improve further as the impact of production cuts is materializing and spot prices are rebounding. Demand for high-performance products such as DDR5 and HBM is also increasing,” the ministry said in a statement.

The country’s total exports have been falling since October last year as overseas sales of semiconductors kept reporting double-digit declines on sluggish demand for IT products and weak global economic recovery.

The government in July expected semiconductor exports to rebound from this month.

IMPROVING SALES TO CHINA

Exports to China, South Korea’s top overseas market, dropped 17.6% in September on-year to $11 billion, marking the slowest decline in 11 months.

Shipments of petroleum products to the world’s No. 2 economy improved on demand for restocking inventory ahead of the National Day holidays in the mainland and for construction, although semiconductor and petrochemical sales continued to fall, the ministry said.

Sales to the US, the world’s largest economy, grew 8.5%, while exports to the Association of Southeast Asian Nations (ASEAN) skidded 8%.

Meanwhile, South Korea’s imports slid 16.5% to $51 billion, resulting in a trade surplus of $3.7 billion.

Write to Han-Shin Park at psh@hankyung.com

Jongwoo Cheon edited this article.