Growing Export Trends of Korea’s IT Industry

Korea’s IT industry, which suffered from sluggish growth after the global financial crisis, was analyzed to have been enjoying growing exports owing to increased exports of IT parts.

According to the data reported by KITA (Korea International Trade Association), this year, the nation’s increase rate in IT exports (9.6%) has been conspicuously going beyond the entire export increase rate (1.3%) and so it leads the nation’s total exports. And especially the increase rate in part exports appeared to have reached nearly double the increase in finished goods.

The export growth of IT parts was conspicuous. The share of parts in IT exports reached 83% during the period from January to August this year, from 66% in 2008. Also the share of IT parts in the entire IT trade surplus was analyzed to have been steadily growing up to 83% this year. By product, three leading areas of semiconductors, communications equipment, and printed circuit boards were analyzed to have been leading the entire IT export growth.

Comprising the largest proportion of the nation’s entire exports, semiconductors featured a sophisticated export structure by balancing the weight between memory and system and so it enjoyed trade surplus in all of such main areas of memory, system, and devices. Display, an item taking up the title of No. 1 trade surplus item, was analyzed to have declined in the exports thereof for TVs, monitors. But the export of displays for mobile phones, tablets was analyzed to have been growing.

For mobile phones, however, the parts export ratio (48.3%) is found to be nearly approaching the level of finished products exports (51.7%). Considering the fact that parts exports including semiconductor and crystal display for mobile is calculated as separate item, the substantial part export can be interpreted to have surpassed the export of finished goods.

Unlike the existing normal trend of rise in export amount and of downward trend in prices in the IT export, from May this year, total IT export prices are converted into a mode of ascendance critically coupled with the recovery in the semiconductor unit cost. And especially, the nation’s competitiveness in IT parts products was analyzed to have been climbing thanks to the upward movement of localization rate in all parts products. By country, the dependency share of the IT products exports on three major trade partners of China, Hong Kong, and the U.S. was analyzed as 62%. China became the largest nation taking the surplus from Korea. And the trade deficit with Japan and Taiwan was also analyzed to have been expanded.

IIT (Institute for International Trade) released its official forecast that the robust exports by the IT industry will last through the end of this year and next year, and especially the two flagship parts of semiconductors and mobile phones will greatly contribute to the increase of total exports. It added, “But regrettably, as the trade deficit of parts of semiconductor, displays, and printed circuit boards with Japan, Taiwan increases, suitable measures for the matter should be devised and implemented.”

IIT’s president explained, “Amidst Korean companies’ fierce global competition in the IT parts areas it increasingly expanded into the Chinese market, along with the existing two rival markets of Japan, and Taiwan, nurturing of IT parts-specialized small and medium-sized enterprises(SMEs), expansion of investment in R&D, and training of professionals should be carried out with the help of governmental-level official support – in order for Korean companies to secure consistent competitive edge and core original technology.”

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