South Korea’s Chip Exports Headed for Rebound as Trade War Eases

(Bloomberg) -- South Korea’s chip exports showed signs of revival after more than a yearlong slump, supporting optimism that the worst is behind for the trade-dependent economy.

Semiconductor shipments, South Korea’s biggest source of income, rose 12% in the first 10 days of January from a year earlier, data from the Customs Service showed Monday. That’s the first time the preliminary figure posted growth since October 2018.

While the expansion benefits from a base effect of poor performance last year, it suggests global tech demand is improving after being battered by the U.S.-China trade war. The two countries entering a phase-one trade deal later this week should further support demand.

“It’s definitely a positive signal,” said Lim Hye-youn, an economist at KTB Investment & Securities, referring to the chip shipment in South Korea’s preliminary trade data. “But it’s still difficult to see the growth big enough to be leading Korea’s strong economic recovery. The base effect played a large role.”

Customs data showed South Korea’s overall exports also rose 5.3% in the first ten days of January, following a full-month contraction of 5.2% in December.

South Korea releases trade data earlier and more frequently than most economies, allowing them to serve as a barometer of global demand. The country is the world’s biggest source of memory chips which go into everything from computers to smartphones.

The ten-days data can be volatile and affected by the number of working days. South Korea’s full-month trade report for January is released on Feb. 1. The Lunar New Year holiday falls on January this year, as opposed to February for 2019, and can affect trade performance for the rest of the month.

--With assistance from Hooyeon Kim.

To contact the reporter on this story: Sam Kim in Seoul at skim609@bloomberg.net

To contact the editors responsible for this story: Paul Jackson at pjackson53@bloomberg.net, Jiyeun Lee, Peter Pae

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