South Korea's chip exports surge over 200% YoY in the first 20 days of May

According to data released by the South Korean customs on Wednesday, exports in the first 20 days of May rose by 64.8% year-on-year, with semiconductor exports surging by 202.1% year-on-year, among which DRAM exports soared by 498% year-on-year, highlighting the strong pull of global artificial intelligence infrastructure investment on South Korea's memory chip industry.

Adjusted for working days, the export increase during the same period reached 52.6%, higher than the 49.4% in the first 20 days of April. Imports increased by 29.3%, with a trade surplus reaching 11 billion US dollars. Exports of computer-related products increased by 305.5% year-on-year.

The detailed data cited by market analysts showed that South Korea's DRAM (including modules) export value reached 11.527 billion US dollars in the first 20 days of May, increasing by 27% month-on-month; the export unit price rose to 60,319 US dollars per kilogram, an increase of 432% year-on-year. NAND flash memory export value increased by 178% year-on-year, and SSD export value increased by 452% year-on-year. The increase in both volume and price indicates that this round of growth is not solely driven by price effects.

Looking at the destinations, exports to Mainland China increased by 96.5% year-on-year, and exports to the United States increased by 79.3%. Auto and home appliance exports were relatively weak, indicating that South Korea's export driving force is highly concentrated in the chip industry chain.

Nomura Holdings economist Jeong-Woo Park stated that the semiconductor price increase effect is expected to continue through the third quarter, and the upward movement of oil prices and chemical prices will also support exports from May to June, but the latter mainly reflects price factors rather than an increase in shipment volume.

However, the strong export performance has not alleviated the policy pressure on the Bank of Korea. Rising oil prices and the weakening won are increasing the risk of imported inflation. New commissioner Kim Jin Il stated last week, "The rise in energy prices makes it difficult to cut interest rates, and warned that the risks of household debt, housing prices, and capital flows have not been resolved." The outgoing commissioner Shin Sung Hwan also said that "it is already very difficult to discuss further rate cuts against the backdrop of rising inflation risks."

South Korea's Q1 GDP grew by 1.7% quarter-on-quarter, reversing the previous quarter's contraction, and hitting the fastest growth rate since Q3 2020. The Bank of Korea will hold its first rate meeting led by new governor Shin Hyun Song on May 28, and policy signals are under close market scrutiny.