In this Jan 31, 2019 file photo, a Samsung flag (right) and South Korean national flag flutter outside the Samsung building in Seoul. (JUNG YEON-JE / AFP)
Global manufacturers’ scramble to get hold of scarce semiconductor supplies is driving faster growth in Asia.
Demand for the chips used inside cars, touch screens, and work-from-home gear amid the pandemic fueled the biggest jump in South Korea’s early-month exports since late 2018, a report showed Monday. On the other hand, China's Taiwan region sees its 2021 economic growth as being the fastest in seven years, thanks to the world’s appetite for semiconductors.
The tech rally shows the global economy is gathering momentum after last year’s pandemic slump. It also speaks to growing worldwide dependence on two Asian powerhouses -- Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co -- for semiconductors
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The tech rally shows the global economy is gathering momentum after last year’s pandemic slump. It also speaks to growing worldwide dependence on two Asian powerhouses -- Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co -- for semiconductors.
South Korea’s early exports increased 16.7 percent in the first 20 days of February from a year earlier, the customs office reported Monday. Average daily shipments increased by an even bigger margin because the period had fewer working days this year due to the timing of the Lunar New Year holiday.
“The exports add to indicators that show that the global economy is rebounding from its bottom,” said Park Chong-hoon, an economist at Standard Chartered Bank in Seoul. “There’s growing demand for tech products that are helping companies worldwide reshape themselves as they prepare for the end of the pandemic.”
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The report, closely watched as a barometer of global trade, indicates a recovery in overseas demand is well underway as vaccination drives pick up speed in major markets. The data also comes after Taiwan on Saturday more than doubled its forecast for export growth this year to 9.58 percent and raised its projection for the economy’s overall expansion.
Some economists warn that chip sales could slow as the pandemic passes and demand for work-and-study from home solutions reverts to something closer to pre-virus days. Another issue would be to what extent the tech boom can benefit the broader economy and support employment, considering the industry’s highly-automated manufacturing base.
“The so-called untact culture has so far helped drive chips, but there’s also a chance vaccinations and new spending by chipmakers may slow down the rally,” said Song Myung-sup, an analyst with Hi Investment & Securities Co in Seoul, referring to a term used in Korea to describe technologies that help people maintain social distance. Still, Song forecasts the chip shortage to deepen at least until the end of the first half.
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The world’s reliance on TSMC and Samsung Electronics comes amid a growing cost and sophistication of advanced chipmaking. As Taiwan’s biggest company, TSMC’s net income grew 50 percent in 2020 -- its speediest pace of expansion in a decade. Samsung Electronics is projected to chalk up its fastest pace of revenue growth since 2018 during the March quarter. South Korea is also home to SK Hynix Inc, another giant memory-chip maker.
Overseas sales of Korea’s semiconductors jumped 27.5 percent in the first 20 days of February as a worsening shortfall accelerated orders and pushed up the prices of chips.
Such momentum in exports contrasts with deteriorating economic conditions at home with the unemployment rate jumping to the highest in more than two decades in January. The Bank of Korea is expected to consider the uneven recovery as its board convenes this week for a rate decision.
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