SEOUL, March 6 (AJP) - A triple whammy of high oil prices, a weakening Korean won and rising raw-material costs is casting darkening clouds across South Korean industries following U.S.‑led airstrikes on Iran, as markets and companies grapple with the fallout from the escalating Middle East conflict.
Energy-intensive sectors are seeing production costs soar due to rising oil and petroleum prices, with traditional manufacturing sectors including petrochemicals and steel facing the heaviest pressure as costs climb and demand weakens, according to industry insiders.
As of early this week, international oil prices briefly surged to over US$80 a barrel. For a heavily export-driven country like South Korea, which depends on imports for more than 90 percent of its energy, higher oil prices translate directly into increased manufacturing costs.
The South Korean currency has also been fluctuating, trading near 1,500 won against the greenback, further increasing the cost of importing raw materials.
But not every sector is feeling the pinch. AI-driven industries including semiconductors, defense, and shipbuilding, are benefiting from strong global demand, creating a growing divide between sectors.
The rising adoption of AI is giving the semiconductor industry fresh growth momentum. According to a forecast by market research Gartner, the global semiconductor market is expected to grow by about 16 percent this year from a year earlier, fueled by increasing investment in data centers and AI infrastructure, boosting demand for memory chips.
Defense and shipbuilding sectors are also benefiting from a shifting global security environment. South Korea's defense exports have held at more than $10 billion in recent years, and shipbuilders have secured roughly three years' worth of orders as demand rises for LNG carriers and eco-friendly vessels.
Experts warn that divides between sectors could widen further if the ongoing conflict in the Middle East drags on.
"Some South Korean industries have been steadily losing ground to China, and crises like the Iran conflict would further expose their vulnerabilities," said Lee Bu-hyung of the Hyundai Research Institute. He emphasized the need for a long-term strategy to overhaul the country's industrial structure.
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