Friday, December 12, 2014

Semiconductors still top Korea's exports

As reported by The Joongang Daily this morning and shown in the accompanying graphic (click for a full size version), semiconductors continued to be South Korea's top export item in 2014.   About a quarter of a century ago, in 1980, this would have been unthinkable.  At that time, despite efforts by the government of President Park Chung Hee in the late 1970s to boost the industry, this nation could not compete in the global market with the dominant U.S. and Japanese firms.   However, in 1980 and early 1981 a small group of U.S. trained technocrats from government, industry and academia wrote a remarkable document called the "Long term plan to invigorate the electronics sector."  It targeted the semiconductor industry, electronic switching for telecommunications, and computers and outlined a plan that envisioned what today is called the ICT sector.
As noted in The Joongang Daily,"The semiconductor business is now Korea’s top export earner. Through November, the nation’s major semiconductor makers including Samsung and SK pulled in about $56.8 billion in revenues, the largest ever and about 10.9 percent of the nation’s total exports for the period."   Furthermore, it noted that "The semiconductor business, which began in the early 1980s, earned Korea foreign exchanges that were used as seed money to develop advanced electronics industries, including smartphones and wireless communication devices. It was the No. 1 export business for 16 years, from 1992 to 2007, but started fluctuating in 2008 due to the global finance crisis.The reason that the business has thrived through the decades is because Samsung and SK won a series of games of chicken early on with global semiconductor makers, including NEC. Samsung Electronics has led the industry since the 1990s and SK became the world’s No. 2 after it made an average of 3 trillion won in annual investments since 2012. SK posted a record operating profit of 1.3 trillion won in the third quarter of this year. Today, the two Korean semiconductor giants control more than 60 percent of the global market share for all kinds of chips. But Korea can’t rest easy because the Chinese are coming. The Chinese government announced a plan of making more than 350 billion yuan ($56.6 billion) in revenues next year and to raise about 120 billion yuan in investments order to accomplish the goal."

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