BOK says chip market will recover next year

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BOK says chip market will recover next year

The global semiconductor market will likely rebound next year on increased demand that may have been held back in the hope of additional price drops, the Bank of Korea (BOK) said Thursday, apparently suggesting a recovery of the local economy as well.

Korea’s exports have dropped for 12 consecutive months as of November amid the prolonged trade dispute between the United States and China but also because of an extended slump in the global semiconductor market.

Semiconductors alone accounted for more than one-quarter of the country’s overall exports in 2018.

The central bank said the ongoing downturn in the semiconductor market was largely due to an oversupply.

“The global semiconductor market periodically faces fluctuations because its supply cannot be flexibly adjusted to changes in demand,” the BOK said in a biennial report submitted to the National Assembly.

It added the price of memory chips further dwindled as global IT firms have “strategically delayed” their purchases since late 2018 in anticipation of additional price cuts.

The BOK said the drop in the price of DRAM chips has slowed since August, while the price of NAND chips has been on the rise since July.

“In addition, shipments of personal computers, which had been on a steady decline over the past several years, have been on the rise since the second quarter of this year,” it said.

“Considering the recent movement of leading indicators, such as memory chip prices, the possibility of a recovery for the memory chip market appears to be growing,” the report said. “Accordingly, outbound shipments of semiconductors are expected to enter a recovery phase in the middle of next year.”

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