Monday, December 31, 2018

The perils of over reliance on manufactured products exports in ICT

My lack of posts this month is largely because I've been working on the second edition of my book, Digital Development in Korea (with Dr. Oh Myung).  Depending on Routledge's production schedules, it should appear in 2019. One chapter of the book deals with long term trends in Korea's ICT exports, including the "super cycle" in semiconductor (integrated circuit) exports during 2017 and 2018.  Consequently I was struck by yesterday's article in The Korea Times entitled "Samsung, SK Hynix bracing for global chip downturn."
Industry data show that the global market for semiconductors has already begun to decline, as shown in the graphic (click for a full size version).  The article quotes a Statistics Korea executive as saying that 
"Orders from data centers have recently been falling off while smartphone production has been stagnating, resulting in falling demand for DRAM for servers and memory chips for mobile phones."  It also notes that the downturn in the chip market is likely to deal a blow to the Korean economy because semiconductor exports account for more than 20 percent of total exports.
The Korea Times article seems like a fitting topic for my lone post of December.  As the year comes to a close, it is well for Korean policymakers to remember that more than three-quarters of the global market for ICT products is made up of software and services.  The challenge for this country in 2019 and beyond lies in those areas, not in continued reliance on hardware manufacturing and export.

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