Seoul, Jan 5 (IANS): South Korea's exports of chips, one of its key export items, are expected to top $100 billion this year, the trade ministry said on Tuesday, on the back of rising demand of IT products amid the pandemic-induced contactless trend.

South Korea's chip exports are projected to increase 10.2 per cent on-year to $109.3 billion in 2021, the country's second-best performance after 2018, when it shipped $126.7 billion worth of semiconductors, according to a report from the Ministry of Trade, Industry and Energy and the Korea Semiconductor Industry Association.

In 2020, the country's chip exports reached $99.2 billion, up 5.6 percent from a year ago, the ministry data showed. Exports of system chips reached their largest number ever with $30.3 billion last year, becoming the fifth-largest export item.

Local research institutions have predicted that exports of memory chips are expected to increase about 12 percent on-year to surpass $70 billion, while those of system chips are estimated to advance 7 percent on-year to reach above $31 billion in 2021, reports Yonhap news agency.

"With the expansion of the 5G market and stay-at-home economy, demands for smartphones, servers and PCs will increase and improve the chip market," a ministry official said.

According to a recent report from World Semiconductor Trade Statistics, the global semiconductor market is projected to grow 8.7 percent on-year in 2021, with the memory sector posting growth of 12.2 percent.

South Korea is home to the world's two leading memory chipmakers -- Samsung Electronics and SK hynix.

Citing data from SEMI, a global industry association representing companies in the chip industry, the ministry said South Korea's spending on chipmaking equipment in 2021 is expected to be the largest in the world at $18.9 billion, beating its rivals China with $16.8 billion and Taiwan with $15.6 billion.