Invest KOREA

The output of the Korean machinery industry in 2022 outperformed 2021 despite the decline in exports, and reached KRW 112 trillion, which is the highest record in the recent decade. The industry's exports fell slightly (down 0.3% year-on-year) to USD 60.4 billion, and imports also decreased slightly (down 3.3% year-on-year) to USD 55.8 billion as the global economy remained sluggish amidst the US-China trade dispute, the prolonged war in Ukraine, and rising raw material prices.

In 2023, domestic consumption continued recovery, but output and exports are expected to decline compared to 2022 due to the severe export slump. At the same time, geopolitical risks triggered by the Israel-Hamas war are likely to play a role. Exports of machinery to China and semiconductor exports, which were expected to rebound in the second half of 2023, continue to stagnate, and a significant growth in demand appears unlikely as high inflation and interest rates weaken the real purchasing power.

The Korean machinery industry has stayed in the 8th place in the global ranking since 2012, but the country's global ranking of the general machinery industry fell from the 8th place to the 9th place in 2021, affected by a 30 percent increase in exports of Netherland's extreme ultraviolet (EUV) lithography systems.

In the machine tool industry, the overall demand for machine tools has recently decreased as fewer parts are used in producing eco-friendly vehicles. At the same time, Korean manufacturers won more orders for manufacturing process equipment, such as those used in producing batteries and motors fitted in eco-friendly vehicles. In the second half of 2023, domestic consumption is expected to remain weak, and exports are expected to slow down, affected by lingering global uncertainties such as monetary tightening of major countries and financial market instability.

In the plant industry, plant orders placed up to Q3 2023 increased by 10.2% year-on-year to USD 19.0 billion. While orders received from the Middle East surged, orders from Europe plummeted. Plant orders are expected to record a year-on-year increase in 2023 as Middle Eastern countries actively build infrastructure.

Players in the construction machinery industry are focusing on developing main parts and technologies needed in intelligent, robotized construction machinery. In terms of performance, the country is expected to perform better year-on-year as the strong growth in the US and the Middle East offsets decreases in the domestic market and emerging countries including China. In addition, performance is expected to improve in the second half of 2023 as Middle Eastern countries build new cities and infrastructure.

In the semiconductor equipment industry, domestic consumption and exports declined as demand from the downstream ICT industry continued to weaken, but the recovery of memory prices is expected to help improve exports. In the display equipment industry, exports of the LCD sector continued declining, while OLED exports grew. Especially noteworthy is that OLED shipments are expected to recover in the second half of 2023 as demands improve.

In 2024, the machinery industry is expected to remain flat as uncertainties continue. In particular, uncertainties are expected to worsen from last year due to the sluggish global economy, the escalation of the US-China trade dispute, and the recent outbreak of the Israel-Hamas war, highlighting the ability of industrial players to manage crises.