Semiconductors with Soaring Exports, the 'Top Contributor' to This Year's Economic Recovery

Average Daily Semiconductor Exports Increased by 85.9% from February 1 to 10
The Only Growth Amid Export Slump...Expected to Support Economic Recovery

This year, semiconductor exports are expected to become the leading contributor to economic recovery. Despite sluggish domestic demand and investment due to high interest rates, exports centered on semiconductors are playing a supporting role, leading to expectations of economic improvement compared to last year.

According to the Korea Customs Service on the 15th, semiconductor export value from the beginning of this month to the 10th reached $2.78 billion, a 42.2% increase compared to the same period last year. While total exports decreased by 14.6% due to fewer working days caused by the Lunar New Year holiday, semiconductor exports were the only category to see a significant increase.

Considering the number of working days, the average daily export value of semiconductors was approximately $430 million, a sharp rise of 85.9% compared to the $230 million average daily export value during the same period last year. Monthly semiconductor exports have been increasing for four consecutive months since November last year, with the growth rate accelerating.

The substantial increase in semiconductor exports is largely due to production cuts by Samsung Electronics and SK Hynix, as well as rising semiconductor prices driven by expectations of global economic recovery. The spot price of memory DRAM has been on an upward trend for five consecutive months since September last year. As spot prices rise, the fixed prices used in actual transactions by Korean semiconductor companies have also been increasing for four months. Semiconductor export volumes have steadily increased, indicating an overall improvement in the semiconductor market.

The improving economic conditions in major semiconductor importers such as the United States and China are also positive signs. The US ISM Manufacturing Purchasing Managers' Index (PMI), a leading indicator of semiconductor exports, was 49.1 last month, significantly exceeding the forecast of 47. This index indicates economic expansion when above 50 and contraction when below; 49.1 is the highest in 15 months. Notably, the new orders index rose by 5.5 points from the previous month to 52.5, marking the largest monthly increase in over three years, suggesting that the US manufacturing sector is nearing an expansion phase.

Kim Il-hyeok, a researcher at KB Securities, explained, "The ISM new orders index, which leads manufacturing activity, rebounded sharply from the previous month, raising expectations for a recovery in the US manufacturing economy."

Aerial View of Yongin Semiconductor Cluster

Expectations for improved semiconductor exports to China are also growing. From February 1 to 10, South Korea's exports to Hong Kong surged by 143.1% compared to the same period last year. Approximately 70% of South Korea's exports to Hong Kong are semiconductors, indicating a clear improvement in exports.

Park Sang-hyun, a researcher at Hi Investment & Securities, said, "Although semiconductor exports directly to mainland China have not yet recovered rapidly, the significant improvement in semiconductor exports to Hong Kong, a detour route, is positive. The semiconductor export growth rate in early February suggests that the semiconductor market is recovering faster."

Government agencies have also raised export expectations. The Korea Development Institute (KDI), a government research institute, announced a revised economic outlook yesterday, raising the total export growth forecast for this year from 3.8% to 4.7%, an increase of 0.9 percentage points. Although investment and consumption are expected to remain sluggish due to sustained high interest rates, exports centered on semiconductors are expected to be the backbone of economic improvement. The economic growth forecast for this year remains unchanged at 2.2%. Last year, South Korea's economic growth rate was 1.4%.

With semiconductor exports improving, the Bank of Korea may raise its export forecast in the revised economic outlook to be announced on the 22nd. In its January economic assessment, the Bank of Korea noted that exports are rapidly improving this year, led by semiconductors and automobiles, and expects the recovery to continue, especially in the IT sector.