A decline in South Korea’s competitiveness could lead to broader economic instability and jeopardize the country’s technological leadership.
According to a recent industry report, South Korea’s semiconductor exports are under increasing pressure due to mounting competition from China, Taiwan, and Malaysia. The escalating tensions between these nations highlights the evolving dynamics of the global semiconductor industry.
Taiwan has seen impressive growth in its semiconductor exports in collaboration with South Korea, with its export similarity index (ESI) soaring by 7.6 points in just four years to hit 32.5, the highest increase among leading semiconductor exporters, according to Yonhap news agency. Meanwhile, Malaysia also made significant strides, boosting its ESI by 6 points to 50.5 during the same period, securing the position of the second-highest growth market after Taiwan.
China is accelerating its domestic semiconductor development as part of its strategic push for self-reliance in critical technologies. Generous government subsidies and state-backed enterprises are bolstering its efforts. On the other hand, Taiwan is leveraging its leadership in advanced node production through companies like TSMC, which remains a global leader in cutting-edge chips. Competitor Malaysia is also undertaking efforts to position itself as a significant player in semiconductor assembly, testing, and packaging, with increasing foreign investments.
During December 1-10, outbound shipments surged to USD 17.6 billion, marking a notable increase from USD 15.6 billion in the same timeframe last year, according to the Korea Customs Service. Imports also rose significantly, climbing 11.6 percent year-on-year to reach USD 19.1 billion, which led to a trade deficit of USD 1.55 billion. When adjusted for working days, the daily average exports saw a strong 5 percent increase year-on-year, amounting to USD 2.34 billion, as reported by the agency.
The Korea Trade-Investment Promotion Agency (KOTRA) has highlighted that Malaysia has established itself as a formidable player, now standing fifth in the world for semiconductor exports and managing an impressive 13 percent of global semiconductor assembly, testing, and packaging. This report raises critical concerns about South Korea’s struggle to maintain a technological advantage over its rivals.
“This is a critical time for South Korea to leverage its technological strengths to enhance market share in exports,” stated KOTRA, urging companies to develop strategies for improved competitiveness quickly. Notably, according to Wednesday’s data, South Korea’s exports surged 12.4 percent in the first ten days of this month compared to last year, fueled by strong semiconductor shipments.
