Under the push of the global AI investment boom, South Korea’s chip sales have hit a historic high. On Monday, June 1st, South Korea announced its preliminary trade data for May, showing that the country’s export growth rate has reached a new high in 40 years, boosting the optimism in South Korea’s trade-dependent economy and its globally leading stock market rally.
The preliminary trade data released by South Korea revealed that the country’s export value increased by 53.2% year-on-year, reaching a record-breaking $87.75 billion, surpassing the median estimate of 48.4% growth previously predicted by the market and accelerating from the 48% growth seen in April.
This marks the 12th consecutive month of positive export growth for the country, achieving the largest increase since January 1984. Additionally, South Korea reported a trade surplus of $26.95 billion in May, higher than April’s $23.75 billion, also setting a new record for monthly trade surplus.
Stephen Lee, an economist at Meritz Securities in Seoul, commented, “This is truly an unprecedented pace, repeatedly exceeding market expectations and surpassing them time and time again.” He predicted that the growth momentum in the third quarter will be even stronger, with the annual export growth rate reaching around 50%. “This demonstrates the rationale behind the rise of the Korea Composite Stock Price Index (KOSPI) and increases people’s expectations for economic growth this year.”
He added that the expected economic growth rate for South Korea in 2026 is projected to exceed 2.6%, which is consistent with the forecast by the Bank of Korea last week when the central bank raised its economic growth outlook from the original 2.0% to 2.6%.
Prior to this, the trade-dependent economy achieved its strongest growth in nearly six years in the first quarter of this year, with export values surpassing $80 billion for the third consecutive month, mainly due to the robust growth in chip exports.
The benchmark KOSPI stock index in South Korea has become one of the best-performing indices globally in this AI-driven surge. In early trading on Monday, it surged over 2% to hit a historic high. Similarly, Taiwan, also primarily export-oriented in semiconductors, saw its stock market rise by nearly 2% in early trading on Monday.
Since the beginning of the year, the KOSPI stock market has surged over 100%, led by major semiconductor manufacturers such as Samsung Electronics and SK Hynix. They have profited immensely from the surge in chip and memory prices, driving a significant increase in their profits. The index rose by 76% last year, marking the largest increase since 1999.
On the same day, another official survey released by South Korea revealed that manufacturers have increased inventory in response to the impact of the Middle East conflict, leading to the strongest expansion in factory activity in over five years in May.
South Korea’s official trade data indicated that semiconductor exports soared by 169.4% in May, reaching a monthly record high of $37.16 billion, primarily driven by U.S. tech companies expanding their investments in the AI field, driving continuous price increases for memory chips.
Furthermore, driven by global demand for AI servers, South Korea’s computer exports sales surged by 290.7%, with wireless communication equipment and displays growing by 12.6% and 9.4%, respectively, while petroleum product exports rose by 46.6% due to soaring oil prices.
In contrast, the South Korean automotive industry showed a continuous decline, with a 5.9% year-on-year decrease in exports. The main reasons cited were shipping disruptions caused by the Middle East conflict, reduced working days, and the impact of U.S. tariff policies on South Korean automobiles.
In terms of export destinations, South Korea’s shipments to the United States, ASEAN, and China increased by 59.1%, 58.4%, and 80.9% respectively, while shipments to the Middle East decreased by 7.7%.
Additionally, South Korea’s import value grew by 20.8% to reach $60.8 billion. Although this growth rate was slightly lower than the economists’ expected 21.5%, it still represented the highest increase since August 2022.
(*This article references Reuters)