South Korea's industry outlook: Auto, battery sectors bright; machinery, steel cloudy

South Korea's industrial landscape is poised for a mixed performance in the latter half of 2024, with key sectors like automobiles and batteries benefiting from demand in artificial intelligence (AI) and new technologies. The "ABCD" industries, Automobile, Battery, Bio, Chips, and Display, are expected to see favorable conditions, according to an analysis by the Korea Chamber of Commerce and Industry (KCCI).

The semiconductor sector is forecast to be particularly strong, continuing its upward trend from the first half of the year. Driven by intense investment in AI infrastructure and a surge in global data center construction, semiconductor exports are projected to increase by 92.2% year-on-year in the second half. Display manufacturing is also expected to perform well, buoyed by the adoption of OLED technology in IT and automotive products, along with advancements in foldable and LTPO displays.

Automotive and battery industries are anticipated to experience a "mostly sunny" outlook. The automotive sector is expected to see a 3.9% increase in domestic sales and maintain its export levels, boosted by eco-friendly vehicle sales and continued strength in the North American market. The battery industry, a key supplier for electric vehicles, is projected to see a significant 19.1% rise in exports. However, both sectors face challenges from low-priced competition originating from China.

In contrast, the machinery and steel industries face a "cloudy" forecast, largely due to trade barriers such as U.S. tariffs and stricter import regulations from the European Union. The machinery sector's exports are expected to decline, while the steel industry will be impacted by reduced tariff-free import quotas from the EU. The petrochemical industry faces the most challenging outlook, predicted to be "rainy" due to global oversupply, despite a potential increase in production as raw material sourcing normalizes.