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Investing.com -- Shares of SK Hynix (KRX:000660) fell by 4.5% while Samsung Electronics (KRX:KS:005930) saw a 3.2% drop in their stock value as the South Korean semiconductor industry grapples with export challenges.
Citi analysts have pointed to the lack of recovery in semiconductor exports, particularly in Multi Chip Packages (MCP), including High Bandwidth (NASDAQ:BAND) Memory (HBM), following a significant drop in January. This downturn comes despite a seasonal rebound in exports and a YoY growth that fell short of market and Citi’s expectations.
In February, semiconductor exports recorded a -3.0% YoY growth for the first time since October 2023. This decline is attributed to the aftermath of front-loading activities from December 2024, when China importers may have advanced purchases of Korean memory chips in response to the US’s strengthened semiconductor trade restrictions.
The overall trade balance for South Korea, however, shifted to a surplus of US$4.3bn, aided by a slower recovery in imports. The auto sector, on the other hand, showed stronger exports, potentially boosted by pre-emptive measures ahead of anticipated US auto tariffs, which President Trump suggested could be "in the neighborhood of 25%" starting as early as April 2nd. Hybrid car models outperformed EV and ICE models in shipments.
Citi analysts have expressed concerns over the near-term outlook for exports, forecasting a slowdown in YoY exports growth from 9% in the first half of 2024 to 7% in the second half of 2024, and an expected decline of -2% in the first half of 2025.
This outlook is based on several factors, including the adverse effects of US tariffs and semiconductor trade restrictions, a gradual moderation of semiconductor exports growth, and the stabilization of Brent crude oil prices.
"We continue to expect a slowdown in YoY exports growth from 9%YoY in 1H24 to 7%YoY in 2H24E and -2% in 1H25E due to four factors: [1] the negative impact of the US’s tariffs, [2] the negative impact of the US’s semiconductor trade restriction, [3] a gradual moderation of YoY semiconductor exports growth, and [4] Citi’s view of Brent crude oil price stabilization," Citi analysts said in a note.
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