Korean exports continue to decline as memory chip market collapses

Containers being loaded at a port in Busan on Wednesday [YONHAP]

Korea logged an on-year decline in exports for the fifth consecutive month in February, weighed down by weak chip demand and a slowing global economy.

The monthly trade deficit came in at $5.3 billion, compared to January's record figure of $12.7 billion, driven by high fuel prices.

Korea reported a negative balance for the twelfth consecutive month, the longest string of negative readings since the 1997 crisis. Trade deficits stacked up so far this year equal 38 percent of total trade deficits logged last year.

In February, exports declined 7.5 percent on year to $50.1 billion, according to the Ministry of Trade, Industry and Energy Wednesday.

Weak semiconductor demand as well as a high base effect from February last year pulled the figure down.

Chip exports plunged 42.5 percent on year to $6.0 billion, weighed down by plunging memory chip prices.

Semiconductor is Korea’s largest export item. Memory chips were 57.1 percent of total semiconductor exports in 2022.

The price of dynamic random access memory, or DRAM, was $1.81 in February, from the average price of $3.41 in the January-April period last year, according to the Trade Ministry. The average NAND memory price stood at $4.14 from October to February, compared to $4.81 in the first five months of last year.

Due to the decline in the semiconductor demand, exports to China decreased 24.2 percent to $9.9 billion.

Exports to the United States increased by 16.5 percent and 13.2 percent helped by strong exports.

In February, car exports came in at a record monthly figure of $5.6 billion, up 47.1 percent on year. Electric vehicle (EV) battery exports rose 25.1 percent to $870 million.

Petroleum products exports increased 12 percent to $4.7 billion.

Imports inched up 3.6 percent on year to $55.4 billion on year, due in part to an increase in fuel imports.

As a result of declining exports and growing imports, Korea logged a trade deficit of $5.3 in February. But the deficit shrank compared to a record figure of $12.69 billion in January, as exports rose by $4 billion from the previous month.

“The ongoing economic slowdown worldwide is continuing to push down exports,” said Lee Chang-yang, Minister of Trade, Industry and Energy.

“As Korea is highly dependent on the global economic situation, we need a strong export drive to overcome the multiple crises, such as high base rates and economic slowdown,” said Lee, promising to push forward the government policies to boost exports.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]