SEOUL, Dec. 18 (Korea Bizwire) — South Korea’s chip and semiconductor firms performed well throughout 2017 to set record-breaking earnings, industry watchers said Monday, while the diplomatic row with Beijing dealt a harsh blow on tourism and automobile businesses.
The country’s tech giants saw their earnings soar throughout this year due to the global boom of the semiconductor industry, especially on the rising demand for dynamic random-access memory (DRAM) chips.
Over the January-September period, chips accounted for 16.1 percent of South Korea’s combined exports, standing as the most crucial product for Asia’s fourth-largest economy.
Samsung Electronics Co. raked in 24.3 trillion won (US$22.2 billion) in the chip segment through the first three quarters of this year, and its smaller rival SK hynix Inc. also earned a record-high profit of 9.2 trillion won over the cited period.
Petrochemical and chemical companies also enjoyed sound returns for this year.
SK Innovation Co., which posted an operating profit hovering above 3 trillion won last year for the first time as a South Korean petrochemical firm, is also expected to set a new record for all of 2017.
In the July-September period alone, SK Innovation posted an operating profit of 963 billion won.
Steelmakers also showed signs of recovery with No. 1 player POSCO posting an operating profit hovering above 1 trillion won for the first and third quarters of 2017, apparently due to the rising demand from developing nations.
As for the smartphone industry, Samsung Electronics managed to maintain its No. 1 spot, although LG Electronics Inc. continued to post operating losses in the handset segment for the 10th consecutive quarter in the July-September period.
South Korea’s automobile industry faced a major crisis in 2017 due to the diplomatic row between Seoul and Beijing.
China rolled out various economic retaliations against South Korean firms earlier this year in protest to Seoul’s decision to deploy a U.S. missile defense system. The barriers were partially lifted only recently.
Hyundai Motor Co. and Kia Motors Corp. saw their shipments to China fall 41.6 percent in the January-September period from a year earlier.
The two carmakers’ shipment to the United States backtracked 10.2 percent over the cited period, which has raised concerns that South Korean automobiles are losing competitiveness in the overseas markets.
The retail and tourism industries also tumbled in 2017 due to Seoul-Beijing tensions coupled with lackluster consumer sentiment here.
Attributing to a heavy dependency on Chinese tourists, Lotte Duty Free, the top duty-free operator, posted an operating loss of 29.8 billion won in the second quarter.
Lotte also became a key target of Beijing’s economic retaliation as the retail giant provided its land to the government as the host site of the Terminal High Altitude Area Defense (THAAD) system.
As China also banned group tours to South Korea earlier this year, the number of Chinese visiting South Korea came to 2.38 million in the March-October period, down 60.1 percent from a year earlier. The ban was only partially lifted recently.
U.S. President Donald Trump’s support for protectionism also sparked uncertainties over South Korean industries.
Washington’s International Trade Commission (ITC) said last month it is recommending a 50 percent tariff rate on washers built by Samsung and LG exceeding a quota of 1.2 million units.