South Korea’s exports decline for 7 consecutive months amid chip slump

The Trade Ministry is seeking ways to recover reduced trade with China, the nation’s biggest trade partner.

Jo He-rim

Jo He-rim

The Korea Herald


Kim Wan-ki, head of International Trade and Investment at the Trade Ministry, speaks during a press conference in the Sejong Government complex in Sejong, Gyeonggi Province on Monday. (Yonhap)

May 2, 2023

SEOUL – South Korea’s exports declined for the seventh consecutive month in April, as the chip industry experienced the worst slump of sagging demand and prices, the Trade Ministry said Monday.

The Ministry of Trade, Industry and Energy reported that the country witnessed its outbound shipments decline 14.2 percent on-year to stand at $49.6 billion in April.

While inbound shipments also decreased by 13.3 percent to log $52.23 billion, the country’s trade landed in the red for the 14th month, logging a deficit of $2.62 billion.

The ministry said the continued fall in the export of semiconductors, the country’s key export item, and slow recovery of the global economy from the pandemic affected the trade performance. Reduced exports to China, a fall of 26.5 percent on-year, has also been cited as a reason for the decline.

In April, the country saw its exports of automobiles and ships increase by 40.3 percent and 59.2 percent on-year, respectively. However, outbound shipment of chips fell by 41 percent, and exports of display and steel products also decreased by 29.3 percent and 10.7 percent, respectively.

Forecasting that the trade balance would gradually improve, the Trade Ministry said it will push on with “strong support programs” to boost exports.

“We will offer tailored support programs for sectors showing high potential for growth in the short-term plan, and increase investment for semiconductors and advanced technologies in mid- to long-term,” Kim Wan-ki, the head of International Trade and Investment at the Trade Ministry said on Monday.

Regarding concerns of reduced trade with China, South Korea’s biggest trading partner, Kim also said the country will make efforts to establish “diverse channels” to increase exchanges, and support exports of premium consumer goods to the neighboring country.

South Korea’s chip industry, led by the world’s No. 1 and No. 2 memory chip makers Samsung Electronics and SK hynix, has reported poor performance in the first quarter of this year due to sluggish demand and falling prices.

Last week, Samsung reported its worst quarterly operating profit in 14 years for the January-March period this year.

In a regulatory filing, the tech giant posted an operating profit of 640.2 billion won ($477.7 million) in the first quarter, plunging 95.5 percent on-year. It is the first time the company’s quarterly operating income has gone below 1 trillion won since the first quarter of 2009, when it logged 590 billion won in profit.

The company said its sales fell 18.1 percent to 63.75 trillion won, attributing the poor performance to its slumping chip business which recorded a deficit of 4.58 trillion won.

SK hynix also reported a grim scorecard, with an operating loss of 3.4 trillion won in the first quarter of this year. The chipmaker also fell in the red for a second consecutive quarter.

SK’s sales in the January-March period marked 5.08 trillion won, down by 34 percent from the previous quarter. Operating profit plunged by 79 percent and net loss came to 2.58 trillion won during the three-month period.

The chipmakers blamed slumping demand, falling prices and geopolitical factors for the decline in sales and operating profit.

Other nations are also experiencing similar declines in exports in the wake of the global economic downturn, the ministry said.

Japan is suffering from a prolonged trade deficit, with its monthly exports recording a decline for 10 consecutive months since April 2022. Taiwan, which has strengths in IT products, saw its exports decrease by 19.1 percent in March. Vietnam also witnessed its exports decrease by 11.7 percent in the first quarter, the ministry said.

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