SEOUL • Global manufacturers' scramble to get hold of scarce semiconductor supplies is driving faster growth in Asia.
Demand for the chips used in cars, touch screens and work-from-home gear amid the pandemic fuelled the biggest jump in South Korea's early-month exports since late 2018, a report showed yesterday.
At the weekend, Taiwan's government said it sees this year's economic growth being the fastest in seven years, thanks to the world's appetite for semiconductors.
The tech rally shows the global economy is gathering momentum after last year's pandemic slump. It also speaks to growing worldwide dependence on two Asian powerhouses - Taiwan Semiconductor Manufacturing (TSMC) and Samsung Electronics - for semiconductors, a reliance exacerbated by the pandemic and rising United States-China tensions, even before the current global shortages.
South Korea's early exports increased 16.7 per cent in the first 20 days of this month, from a year earlier, the Customs office reported yesterday.
Average daily shipments increased by an even bigger margin because the period had fewer working days this year due to the timing of the Lunar New Year holiday.
"The exports add to indicators that show that the global economy is rebounding from its bottom," said Mr Park Chong-hoon, an economist at Standard Chartered Bank in Seoul.
"There's growing demand for tech products that are helping companies worldwide reshape themselves as they prepare for the end of the pandemic."
The report, closely watched as a barometer of global trade, indicates that a recovery in overseas demand is well under way as vaccination drives pick up speed in major markets.
The data also comes after Taiwan last Saturday more than doubled its forecast for export growth this year to 9.58 per cent, and raised its projection for the economy's overall expansion.
Some economists warn that chip sales could slow as the pandemic passes and demand for work-and-study-from-home solutions reverts to something closer to pre-virus days.
Another issue would be to what extent the tech boom can benefit the broader economy and support employment, considering the industry's highly automated manufacturing base.
"The so-called untact culture has so far helped drive chips, but there's also a chance vaccinations and new spending by chipmakers may slow down the rally," said Mr Song Myung-sup, an analyst at Hi Investment & Securities in Seoul, referring to a term used in South Korea to describe technologies that help people maintain social distance.
Still, Mr Song forecasts the chip shortage to deepen, at least until the end of the first half of this year.
The world's reliance on TSMC and Samsung comes amid a growing cost and sophistication of advanced chipmaking. As Taiwan's biggest company, TSMC's net income grew 50 per cent last year - its speediest pace of expansion in a decade. Samsung is projected to chalk up its fastest pace of revenue growth since 2018 during the March quarter.
South Korea is also home to SK Hynix, another giant memory chipmaker.
Overseas sales of South Korea's semiconductors jumped 27.5 per cent in the first 20 days of this month as a worsening shortfall accelerated orders and pushed up the prices of chips.
BLOOMBERG
