South Korea’s reliance on a few export items has deepened, with the extent twice the average of major exporters to make the country more vulnerable to a downturn in the chip sector that was the primary driver of growth last year.

Korea’s export concentration ratio, which measures the degree to which a country’s exports are concentrated on a narrow range of products, was 137.2 last year, the highest among the 10 major exporters and 1.8 times higher than the average, according to the Korea Economic Research Institute (KERI) on Tuesday.

The ratio tended to be high for Asian countries, with China at 112.7 and Japan at 118.1. France fared the lowest at 50.2, followed by Italy, the U.S., Britain, the Netherlands and Germany.

KERI noted that Korea’s export concentration bottomed out at 102.6 in 2011 and has steadily climbed since to hit a 20-year high last year. The country’s dependence on chips grew as Samsung Electronics and SK Hynix gained more prominence on the world stage while other mainstay sectors such as auto and shipbuilding faltered. This was made worse by Korea’s failure to generate future growth drivers, it added.

The two-year semiconductor rally has exacerbated Korea’s export concentration, the report said. In 2016, chips accounted for 12.6 percent of total exports. This has widened to about 20 percent in 2018.

The rapidly cooling chip sales are likely to deal a heavy blow to the Korean economy. The World Semiconductor Trade Statistics, in its latest report, projected the global chip market to face a 3.3 percent on-year decline this year, with the memory chip sector to plummet 14.2 percent.

KERI also gave a gloomy outlook, citing Korea’s sharp fall in chip exports in the first two months of this year. A 10 percent decline in the memory chip sector could shave 20 trillion won ($17.7 billion) in production and 50,000 jobs, it added.

By Kim Yeon-joo and Kim Hyo-jin

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