BOK warns chip boom to dissipate
By Baek Byung-yeul
Korea's exports grew 10.1 percent in the first quarter year-on-year buoyed by strong sales of semiconductors.
But, industry watchers say it is the time for Korea to diversify its portfolio because the country is too dependent on semiconductors.
The global semiconductor market grew 22 percent to $412.2 billion last year. The price and sales of memory semiconductors increased 37.3 percent and 64.3 percent from a year ago respectively.
With the increased market size, exports of Korean semiconductors reached a record high last year. Outbound shipments of chips totaled $99.71 billion last year, up 60.2 percent from $62.23 billion of 2016.
Exports of semiconductors totaled $10.8 billion in March, the first time a single item has hit the $10 billion mark. Although this figure fell to $9.8 billion last month, it was still the second-highest ever.
However expert says the boom is likely to end in the second half of next year.
The Bank of Korea released a report last month saying the semiconductor boom would probably continue in the first half of next year.
This is because global IT firms such as Amazon and Google have increased their investments in building data centers, which consequently accelerated demand for DRAM.
However, the report also said the boom would probably end in the second half of next year as facility expansion slowed.
Research agency Gartner also forecast that the semiconductor industry boom would be short-lived, most likely falling away in late 2019.
In the global semiconductor market, the memory and non-memory semiconductor segments account for roughly 30 percent and 70 percent respectively while DRAM represents about 60 percent of the memory semiconductor sector.
Korean semiconductors have dominated memory chips with Samsung Electronics' revenue increasing nearly $20 billion last year to put the company into top spot in the business.
While Chinese companies have focused on non-volatile chips, they are moving toward the memory semiconductor market -- another reason Korea should diversify its portfolios.
China's aggressive investment in resources is extremely threatening. The Chinese government says its long-term goal is to become self-sufficient in integrated circuit devices.
In a plan announced in May, 2015, China aims to raise its self-sufficiency rate for integrated circuit products to 40 percent by 2020 and 70 percent by 2025.
The government has approved about $20 billion in funding support with possibly another $100 billion from local government and investors.