South Korea: cellphone exports fall to 16-year low

Korea’s exports of mobile phones hit a 16-year low in 2018 after falling 23.2 percent year-on-year amid mounting competition from Chinese phone makers, data showed Sunday. Cellphones have been a major export item along with semiconductors. But the business has suffered a continued decline because of the slow global smartphone market and increased offshore production of cellphones and their components, industry officials said. According to the data from the Ministry of Science and ICT and the Institute of Information & Communications Technology Planning & Evaluation (IITP), cellphones and components worth $14.61 billion were shipped overseas in 2018, a 23.2 percent fall from the previous year’s $19.03 billion.

 
The figure was the lowest in 16 years since $11.36 billion in 2002. It also marked the third straight year of declines since $30.03 billion in 2015. The weak performance of cellphone exports also comes from fewer locally produced smartphones and components, with more than 90 percent of smartphones from Korean phone makers produced overseas. As of the first quarter of 2018, only 9 percent of Korean phone makers’ smartphones were produced in Korea, according to Strategy Analytics data. The cellphone components business fell 29.7 percent year-on-year because Samsung Electronics ― the world’s largest phone maker with a market share of about 22 percent in 2018 ― is increasingly moving its smartphone factories overseas to emerging countries such as Vietnam and India.

 
Korean smartphones also have been threatened by fast-growing Chinese firms such as Huawei, Oppo and Vivo, which have narrowed the technological gap with Korean products. In consequence, the market share of Korean-made smartphones has been seen declining, occupying 20.3 percent of the global market as of the third quarter in 2018, a fall of about 2 percent from the previous quarter. Given that the demand for smartphones is expected to remain weak, and due to the growing uncertainties from the trade war between the U.S. and China, Korea’s exports of cellphones are expected to fall in 2019. According to market tracker TrendForce, global smartphone production in 2019 is expected to be about 1.41 billion, a 3.3 percent fall year-on-year.

 
“The lack of breakthrough features has made consumers less active than before with respect to replacing their existing devices,” the TrendForce report said. “If the demand outlook becomes worse, together with uncertainties and impacts from the U.S.-China trade war, the decline in global smartphone production may reach 5 percent in 2019.” In its 2019 predictions for the smartphone business, Samsung is expected to remain the market leader with a 20 percent global share. In 2018, Samsung shipped 293 million smartphones worldwide, an 8 percent fall year-on-year.

By Baek Byung-yeul

(Korea Times)