KDI-chip sector
S. Korea needs to diversify chips portfolio to address industry cycle: KDI
By Kang Yoon-seung
SEJONG, May 10 (Yonhap) -- South Korea needs to diversify its chip portfolio as its heavy dependence on memory chips has made the country more vulnerable to the industry's cycle, a state-run think tank said Wednesday.
A 10 percent decrease in exports of semiconductors leads to a 0.78 percent drop in South Korea's gross domestic product (GDP), the Korea Development Institute also said in its report, pointing out the country must maintain a stable chip portfolio to cope with uncertainties.
Memory chips accounted for 63.8 percent of South Korea's outbound shipments of semiconductors in 2022, although the sector takes up around 30.5 percent of the global chip market, the KDI added.
"While the share of the memory sector in the global chip market is only a third of non-memory chips, it tends to show a significant price volatility, leading the recent downcycle in the industry," the think tank said.
The KDI noted that memory chips are usually mass-produced with a small number of products, making them more vulnerable to price fluctuations compared with non-memory products that are normally made through custom orders.
"Expanding the portion of system chips is expected to help in reducing fluctuations," the KDI said, adding the government should also make efforts to cope with the impact of geopolitical risks stemming from the escalating tension between the U.S. and China as well.
South Korea's overall outbound shipments fell 14.2 percent on-year to US$49.6 billion in April, as exports of semiconductors, the country's key export item, sank 41 percent on-year.
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