South Korea: Exports soar at the strongest pace since 1978 with chips

South Korea's exports recorded the strongest growth in nearly 50 years as the global expansion of artificial intelligence continues to drive demand for chips.

The June trade result comes on the heels of an announcement by the South Korean government and major memory chip makers Samsung Electronics and SK Hynix to invest trillions of dollars to deepen the country's role in the semiconductor supply chain and fend off competition from rivals in the United States and China.

Exports soared 70.9% on the year in June, setting a monthly record of US$102.25 billion and marking the fastest pace of expansion since October 1978. This was based on a revised 53.4% increase in May, according to preliminary data released by the Ministry of Commerce, Industry and Resources on Wednesday (1st).

June's result easily surpassed the median growth forecast of 57.3% from a Wall Street Journal survey of nine economists.

Imports increased 30.1% to US$66.10 billion last month, resulting in a trade surplus of US$36.15 billion and surpassing the US$30 billion mark for the first time. In May, the surplus was US$27.04 billion, after review.

Semiconductors remained the main drivers of shipment growth, the South Korean Ministry of Commerce said, with chip exports hitting a new monthly record of $44.82 billion in June.

Amid no signs that the global AI infrastructure boom is slowing, South Korea's semiconductor exports have tripled from the previous year.

Computer exports more than quadrupled from a year earlier in June, while shipments of wireless communications devices, including smartphones, jumped 51%, ministry data showed.

While sectors linked to AI continue to advance, others are not doing so well. Auto parts shipments fell 2.4% year-on-year in June, while vehicle exports rose just 5.8%, the data showed.

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By destination, exports to the US and China increased 79% and 92%, respectively, year-over-year in June, while shipments to the Middle East fell 8.4%.

Wednesday's trade data showed further evidence of so-called K-shaped growth in South Korea, in which non-tech industries continued to face higher raw material costs, supply constraints and logistical challenges arising from tensions in the Middle East, even as the US and Iran have forged a fragile ceasefire.

Several banks, including ING and Citi, recently raised growth forecasts for Korea, citing tailwinds such as increased capital investment under the government-led AI investment plan.

According to ING, exports will lay the foundation for stronger private consumption, government spending and investment.

"Asia appears to have largely overcome the impact of the energy price shock," said Gareth Leather of Capital Economics in a note.

"And most economies look set to post solid growth this year, helped by very strong demand for AI-related products, which is boosting exports."

Content translated with the help of Artificial Intelligence, reviewed and edited by the Broadcast Editorial Team (Grupo Estado's real-time news system.

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Source: CNN