The Economist Cites Me on Japan's Anorexic Demand

Treść źródłowa

Ethan Wu cites me in an Economist essay arguing that, despite rosy headlines, these three countries are “suffering from industrial rot.” He makes the following points:Northeast Asia’s export industries increasingly operate on two tracks. On one track, the boom in artificial intelligence is driving high-tech exports by the all-conquering chipmakers of South Korea and Taiwan, and by Japanese makers of equipment and materials used in chipmaking. On the second track, the rest of industry is clapped out. If you exclude semiconductors and AI servers, Taiwanese exports have actually fallen by 40% since 2022. In South Korea, non-AI exports have stagnated, and Japan’s industry is in decline. In areas such as cars and chemicals, China is lapping the trio.China once absorbed northeast Asian capital and intermediate goods, which its factories assembled into finished products. It is now a direct rival. South Korea’s exports overlap most with China’s in products in which China’s market share is growing fastest, calculates Adam Wolfe of Absolute Strategy Research, a consultancy. Japan is the third-closest (after Vietnam, which is gaining ground on China in some lower-tech industries).The result is that northeast Asian manufacturing is getting narrower. Chips and other gear related to AI make up over 40% of South Korean exports, more than double their share just two years ago. In Taiwan, it accounts for 80% of exports, compared with about half before the pandemic. After accounting for firms not neatly captured as AI -linked in official statistics, like Japan’s Advantest (which makes chip-t…