Industry Trend Analysis - Korea Conflict Scenario: Impact On Electronics Supply Chains - OCT 2017


BMI View : South Korea ' s increasing specialisation in knowledge and capital intensive component production of memory ICs and LCD panels, which are key parts of electronic products, elevate the risk of disruption to supply chains in the event of conflict.

In this article, we assess the implications of a conflict between the two Koreas for global electronics supply chains. This scenario assumes that a full-blown war breaks out, halting or delaying production of electronics components (see ' Korea Conflict Scenario: Assessing Global Economic Implications ' , August 16 2017). South Korea is a vital centre for global electronics supply chains, the second largest market for semiconductor manufacturing equipment behind the US, and a major producer of key components such as memory integrated circuits (ICs) and liquid crystal display (LCD) panels. While the country also imports a lot of electronics, its increasing specialisation in knowledge and capital intensive component production of memory ICs and LCD panels elevates the risk of disruption to global supply chains.

Semiconductor foundries in Europe and the Americas could take on more of global output in the event of a loss of facilities in South Korea and the wider region, but restoring output of memory ICs and LCD panels to current levels would be challenging and costly. A prolonged halt in South Korea production would therefore lead to a rise in the price of electronic products globally.

Memory IC Exports Key To Global Supply Chain
South Korea - Electronic Components Trade (USDmn), 2016
Source: Trade Map, BMI

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