ANN/THE KOREA HERALD – South Korea reached a record-high monthly trade deficit of USD12.69 billion in January, mainly due to weakening global demand for semiconductors, according to data compiled by the Ministry of Trade, Industry and Energy.
While outbound shipments fell 16.6 per cent on-year to USD46.27 billion in January – the largest drop in three years – imports slipped 2.6 per cent on-year to USD58.96 billion. This figure broke the previous record high of USD9.43 billion in August last year. It is also the first time that the country saw a trade deficit for 11 consecutive months since 1997.
“Seasonal causes such as an increase in energy imports during the winter played a major role in January’s monthly trade deficit, while other factors such as a sharp decline in semiconductor export prices and disruptions in Chinese economic activities due to COVID-19 further deteriorated the trade balance,” Finance Minister Choo Kyung-ho said during a meeting in Seoul.
In January, exports of semiconductors, the country’s key export item, recorded USD6 billion, down 44.5 per cent on-year.
This was due to weakening prices and demand for memory chips in the global market.
The industry was especially hit hard by the price fall of memory products like DRAM and NAND flash, which take up 57.1 per cent of South Korea’s semiconductor exports.
Adding to that, exports of system semiconductors, which had been showing an upward trend in exports, decreased by 25 per cent in January.
Korea’s semiconductor exports are highly dependent on the Chinese market, which accounted for 40.3 per cent of the country’s total semiconductor exports last year. Sluggish exports to China are also often a sign of the semiconductor industry’s poor performance overall.
Monthly semiconductor exports to China stayed around USD4 billion for 16 consecutive months until September last year, but in October the figure dropped dramatically to USD3.61 billion and has not bounced back since, recording USD3.24 billion in November and USD3.23 billion in December.
Moreover, two of South Korea’s leading semiconductor makers – Samsung Electronics and SK hynix – saw earnings shocks in the fourth quarter of last year.