South Korea's exports fell year-on-year for the fifth consecutive month in February, dragged down by weak demand for chips and a slowing global economy, the JoongAng Ilbo reported. Exports fell 7.5 percent in February from a year earlier to $50.1 billion, according to data from the Ministry of Trade, Industry and Energy on Wednesday.
The monthly trade deficit was $5.3 billion, compared with a deficit of $12.7 billion in January due to high fuel prices.
South Korea is an export-oriented country, with exports accounting for as much as half of its gross domestic product (GDP). South Korea has posted negative balances for the 12th month in a row, the longest string of negative numbers since the 1997 crisis. The trade deficit accumulated so far this year is equivalent to 38% of last year's total trade deficit.
Weak demand for semiconductors and a high base effect since last February dragged down the figure. The semiconductor industry is the lifeblood of South Korea's economy, accounting for about 20 percent of the country's total exports in the past.
Chip exports fell 42.5 percent year-on-year to $6 billion, dragged down by a plunge in memory chip prices. In 2022, memory chips will account for 57.1% of total semiconductor exports.
The price of dynamic random-access memory (DRAM) was $1.81 in February, compared with an average of $3.41 from January to April last year, according to the trade ministry. From October to February, the average price of NAND memory was $4.14, compared with $4.81 in the first five months of last year.
Exports to China fell 24.2 percent to $9.9 billion due to lower demand for semiconductors. Exports to the US, however, rose 16.5 percent and 13.2 percent, respectively.
DRAM prices continue to fall, and the two major storage manufacturers in South Korea suffer serious losses
DRAM prices could fall 20 percent in the first quarter and another 11 percent in the second, while prices for NAND flash memory chips will drop 10 percent in the first quarter and 3 percent in the second, according to market tracker TrendForce. DRAM prices fell 34% in the second half of last year.
Samsung Electronics' memory chip business lost 3 trillion won ($2.3 billion) in the first two months of this year, and the loss for the entire quarter could be even bigger, according to semiconductor industry sources. The Suwon-based chipmaker estimated that its operating loss could balloon to 4 trillion won by the end of the first quarter as the market downturn continues into 2023. "Internally, there was a report estimating an operating loss of up to 4 trillion won from the memory chip business in the first quarter," one of the sources said.
It would be the unit's first loss since the fourth quarter of 2008, when the world was reeling from the economic crisis triggered by the collapse of Lehman Brothers.
Another major storage manufacturer, SK Hynix, generates more than 90% of its sales from memory chips. Analysts forecast an operating loss of 2.7 trillion won for the world's second-largest memory chip maker in the first quarter, according to market tracker FnGuide. The Icheon, Gyeonggi-based producer posted an operating loss of 1.7 trillion won in the fourth quarter of last year, compared with a profit of 4.21 trillion won a year earlier.
Some experts have called for a focus on high-end products, which are less affected by the sharp fall in prices.
Welcome to our new office!
TI launchs the industry's first stand-alone active EMI filter ICs, supporting high-density power supply designs
