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Uncertainty hangs over S. Korean chip exports in March

All News 10:37 March 03, 2020

SEOUL, March 3 (Yonhap) -- Despite a solid recovery a month ago, uncertainty is mounting over South Korea's semiconductor exports in March due to the global spread of the new coronavirus.

The deadly coronavirus outbreak is spreading rapidly in South Korea, Japan, Iran and Europe, dampening both business and consumer sentiment as well as hitting related industries hard.

Officials and analysts say South 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.

South Korea's overseas shipments of chips advanced 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.

Uncertainty hangs over S. Korean chip exports in March - 1

"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 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."

Earlier, market researcher 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 South Korean chipmakers will have no choice but to suffer setbacks should a prolonged coronavirus outbreak disrupt China's production lines.

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

This undated file photo shows Samsung Electronics Co.'s chip production line in Giheung, south of Seoul. (Yonhap)

The gloomy outlook for March comes after the solid recovery in South Korea's chip exports, driven by rising demand from North American data centers and rising memory chip prices.

Kim Kyung-min, an analyst at Hana Financial Investment, estimated that South Korea's memory chip exports to China surged 20 percent on-year in February, despite a long Lunar New Year holiday there.

According to market tracker DRAMeXchange, prices of DRAM chips for personal computers touched a monthly high of US$2.88 in February, up 1.4 percent from the prior month. Prices of 32-gigabit server DRAMs came to $115.50 last month, up 6 percent from the preceding month.

In a recent report, Daeshin Securities estimated that demand for server DRAMs got a boost from the expansion of North American data centers and increased telecommuting in the wake of the coronavirus outbreak.

South Korea, Asia's fourth-largest economy, is reeling from the fast spread of the pneumonia-like disease. As of early Tuesday, the country had more than 4,800 confirmed cases, with the coronavirus death toll hitting 29.

Some watchers, meanwhile, said the possibility of disruptions in production at chip plants in South Korea or China cannot be ruled out totally.

Last month, a confirmed coronavirus case was reported at Samsung Electronics Co.'s chip production line in Giheung, south of Seoul, sparking concerns over a shutdown.
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