Rebound in semiconductor exports may be short-lived

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Rebound in semiconductor exports may be short-lived

Despite solid recovery a month ago, uncertainty is mounting over Korea’s semiconductor exports in March amid the worsening global spread of the new coronavirus.

The deadly virus outbreak continues to spread rapidly in Korea, Japan, Iran and Europe, dampening both business and consumer sentiment as well as hitting related industries hard.

Officials and analysts say Korea’s overseas shipments of chips, one of its flagship export items, will likely take a hit in March should the outbreak last for a long period of time.

Korea’s chip exports increased 9.4 percent from a year ago in February, the first on-year increase in 15 months.

Announcing the country’s export tally for February, the Ministry of Trade, Industry and Energy struck a cautious note over this month’s semiconductor exports.

“If the fallout of Covid-19 continues for long, there is a need to keep tabs on whether chip exports will be able to keep growing in March and thereafter,” the ministry said.

Market watchers also chimed in.

“It is necessary to lower expectations for semiconductor exports in March. Compared with a year earlier, they are expected to shrink,” said Hana Financial Investment in a note to investors.

Lee Seung-woo, an analyst at Eugene Investment & Securities, was downbeat as well.

“Concerns are escalating over a fall in demand for IT products amid the global spread of Covid-19. It is hard to be rosy about the situation after March,” Lee said.

Earlier, market research firm TrendForce cut its forecast for first-quarter global smartphone production by 10.4 percent from an earlier estimate, forecasting slowing growth for smart watches, notebook computers and monitors.

Other watchers said Korean chipmakers will have no choice but to suffer setbacks should a prolonged coronavirus outbreak disrupt China’s production lines.

China is Korea’s leading export market, with slightly over 25 percent of Korea’s overseas shipments going to the world’s second-largest economy. Chips accounted for roughly 18 percent of all exports in February.

The gloomy outlook for March follows rising demand from North American data centers and rising memory chip prices.

Kim Kyung-min, an analyst at Hana Financial Investment, estimated that Korea’s memory chip exports to China surged 20 percent on year in February.

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