Gloomy prospects for Semiconductors while cars remain bright

Semiconductors and cars, two main export items, showed the extreme light and dark sides of the export industry in the first of half this year.

Semiconductor exports have been among the worst to suffer in the general IT (Information Technology) depression, decreasing 27%, however, car exports increased 6.9% beyond expectations.

According to the Ministry of Commerce, Industry and Energy (MOCIE) on June 29, semiconductor exports in the first six months of this year were estimated at 9.69 million dollars, a 27% decrease from the first half of last year. This resulted from an 80% fall in price for 128 MB DRAM chips, dropping as low as USD $3.94 per unit due to a lack demand in the IT industry in advanced countries such as the U.S., MOCIE analyzed.

According to this trend, DRAM exports in January to May, which consist of 40% semi-conductor exports, recorded a 26% decrease compared to the same period of last year. Snowballing decreases began in January when exports dropped by 1.9%, then 9.1% in February, and 19.3% in March, 33% in April, 42.3% in May, and a whopping 46% in June.

MOCIE expected that the export decrease will be alleviated during the second half of this year because world wide semi-conductor companies are regulating production amounts in order to boost the falling prices. Hynix Semiconductor Inc. is attempting to solve liquidity problems through GDR issuances and asset sell -offs.

Semi-conductor exports are expected to decrease by around 20% to between 21 and 22 billion dollars this year. However, car exports in the first half of this year are estimated to have increased to 6.26 billion dollars, 6.9% over the first six months of last year.

Except for February, which showed a decrease of 3.7%, exports grew during January to June, with a 6.4% increase in January, 3.2% in March, a hefty 18.2% in April, 7.5% in May, and 11.8% in June.

Export car units during the first half of this year reached 786,000, a 0.5% decrease over the same period of last year.

Should the increases continue, car exports would reap in 14.2 billion dollars, a 100 million dollar increase over earlier estimations, and a 7.4% increase over last year, the industry anticipated.

This increase was attributed to the general stability and weakness of the won, the industry focusing more on exports because of weak domestic demand, and diverse model choices due to new model introductions.

Daewoo Motors, under court receivership, during January to May, decreased by 50.6% compared to the same period last year. It will regain the same volume it enjoyed in past years during the fourth quarter of this year if negotiations over its sale go smoothly in the second half this year, predicted MOCIE.