Seoul, Jul 10 (IANS): South Korean exports of information technology (IT) products contracted 5.2 percent in the first half of this year due to slowing global demand and rising production of handsets in overseas factories, a government report showed Tuesday.

Exports of locally-manufactured IT products reached $73.27 billion during the January-June period, down 5.2 percent from the same period of last year, according to the Ministry of Knowledge Economy.

The first-half fall was attributed to sluggish demand for IT products caused by Europe's debt crisis, a fall in prices for major items such as chips and flat screens and a growth in production of handsets in overseas factories, Xinhua cited the ministry as saying.

Despite the faltering exports, trade surplus in the sector amounted to $35.29 billion in the first half, more than tripling a surplus of $10.74 billion for all industries. It was due mainly to steeper drop in IT imports that came to $37.97 billion, down 6.5 percent from a year before.

Three major export items, including memory chips, display panels and handsets, showed underperformance in the first half, but system chips and tablet PCs saw their shipments grow, according to the ministry.

Exports of semiconductors contracted 1.6 percent on-year to $24.38 billion during the January-June period. Shipments of memory chips plunged 22.9 percent to $9.98 billion, but exports of system chips jumped 31.5 percent to $11.11 billion.

Shipments of display panels declined 3.9 percent to $14.89 billion over the cited period, but the export fall was slower in the second quarter than in the first quarter due to strong demand from the European Union (EU) ahead of the London Olympic Games.

Handset exports tumbled 34.4 percent on-year to $8.84 billion in the first half. South Korea ranked first in terms of global market share of mobile phones and smartphones, but exports continued their downward trend due to local firms' expansion in overseas production.