Abstract:
South Korea’s semiconductor exports increased by 209% year-on-year in August, reaching a record high of US$46.65 billion, accounting for 47.5% of the total merchandise exports of US$98.25 billion that month, becoming the main force driving South Korea’s export growth. South Korea's trade ministry said the surge in exports was mainly driven by demand for artificial intelligence infrastructure.
As large cloud service providers such as Google and Amazon expand capital expenditures, the demand for high-bandwidth memory and other chips continues to rise. Analysts estimate that semiconductor exports contributed nearly 80% of South Korea's export increase in August, with increased exports of computer products and rising petroleum product prices also providing support.
However, the rapid growth of chip exports has also triggered concerns about the economy's ability to resist risks. Economists pointed out that if the chip industry only gradually cools down, South Korea's economy may be able to withstand it; but if demand suddenly stagnates, the impact may be significantly exacerbated, because South Korea's economy has already shown "two speeds" and other industries that can replace the chip industry are also under pressure.
The Bank of Korea raised the benchmark interest rate to 3% in August, the second consecutive rate hike, and core inflation remains at a high level. Analysts warn that if monetary policy continues to tighten even as chip demand cools and domestic demand is insufficient to replace the gains from exports, the chip boom's support for the economy could quickly weaken.
The performance of traditional industries is also not ideal. South Korea's automobile exports fell 29.8% year-on-year in August. The trade department believes that summer holiday arrangements and partial strikes are important reasons; however, U.S. tariffs and the gradual shift of automobile production to domestic factories in the United States may also create more lasting pressure.
At the same time, the Bank of Korea stated that consumption recovery is gradually accelerating, and South Korean trade data also showed that non-semiconductor exports increased by 20% year-on-year in August. Analysts believe that as long as other cyclical industries maintain good performance, South Korea may still maintain annual real economic growth of about 2% to 3% even if the momentum of the semiconductor industry weakens.
For the next year, economists’ basic judgments are still optimistic. Export growth may slow down due to high base effects and stabilizing prices, but overall is expected to remain positive. Some analysts believe that although South Korea has clearly benefited from the boom in semiconductor and technology exports, it cannot simply be called "over-reliance on chips" for the time being, because when the global economic environment improves, South Korea's other cyclical industries are usually able to benefit simultaneously.
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