Tech war: China-South Korea tech trade slumps in May amid changes in Asia’s semiconductor supply chain landscape
- Semiconductor shipments from South Korea to China saw a 35.7 per cent year-on-year drop in May
- That included a 53.1 per cent plunge in memory chip trade owing to sluggish demand in China
Semiconductor shipments from South Korea to China saw a 35.7 per cent year-on-year drop in May, as trade in memory chips plunged 53.1 per cent owing to sluggish demand, according to the ministry.
While the ministry did not provide a breakdown by country for its chip exports, it said China accounted for about 40 per cent of South Korea’s total chip exports.
That data appeared to match earlier trade figures released by Beijing.
China’s total imports from South Korea, meanwhile, saw a 26.7 per cent decrease in the same period, which marked the steepest drop among the major trade partners of the world’s second-largest economy.
The diminishing tech trade, particularly in semiconductors, between the two countries may reflect how China’s standing in the global chip supply chain has been affected after Seoul closely aligned its interests with Tokyo and Washington.
Some industry analysts, however, see the decreased tech trade between South Korea and China as a result of a slowdown in activity across the global ICT market.
“The decline seems to reflect the broad downturn in the tech cycle rather than US pressure,” said Gary Ng, senior economist for Asia-Pacific at investment bank Natixis. “South Korea’s ICT exports to China and the US both fell considerably in May.”
China’s industrial capacity utilisation rate for electronics also remained low at 74 per cent in the first quarter of this year, “lower than 77 per cent in the same period last year”, Ng said. “It is unlikely that the situation has improved for now. It is more a global problem than export control.”
The reduced ICT trade with South Korea has come at a time when China is sharpening its focus on improving self-sufficiency in so-called legacy chips, such as those used in cars and home appliances, in the face of US export restrictions covering advanced semiconductors and chip-making equipment.
Data released on Thursday by China’s National Bureau of Statistics showed the country’s chip output rose 0.1 per cent to 140.1 billion units in the first five months of this year. That figure covered all domestic output, including those from foreign-funded plants in China.
The Biden administration, meanwhile, plans to allow top semiconductor manufacturers from South Korea and Taiwan to maintain and expand their existing chip-making operations in China, the Wall Street Journal reported earlier this week.