Surging Chinese AI Chip Demand Reverses South Korea's Trade Balance to Surplus
Taylor Wilson
China's AI infrastructure buildout has driven memory-chip demand so high that South Korea's trade balance with China swung from a $764 million deficit to a $3.8 billion surplus in under six months — the only bright spot among East Asian economies.
How dramatic is the turnaround?
In December 2025 South Korea ran a $764 million trade deficit with China. By February 2026 that flipped to an $1.1 billion surplus, widening to $3.8 billion by May.
This means → the balance swung more than $4.5 billion in under half a year, driven almost entirely by one category: semiconductors.
In plain terms = Korean chips suddenly became so valuable that they single-handedly turned the entire trade ledger from red to black.
Why did memory-chip prices spike so hard?
Korean semiconductor exports to China jumped 243% year-on-year in May, as AI infrastructure expansion tightened memory-chip supply.
Morgan Stanley data shows 16GB DDR5 — high-speed memory used in servers and AI training — rose 682% in price; NAND flash — storage media in phones and data centers — rose 807%.
This means → Korea didn't just ship more chips; the unit price multiplied several times over. Volume and price both surged, launching the trade balance skyward.
Why didn't other East Asian economies benefit?
Japan's export volumes to China have fallen roughly 10% since 2022, while Chinese imports stayed near post-pandemic highs. Japan's trade deficit with China hit 1.2% of GDP — a record.
Marcel Thieliant, head of Asia-Pacific at Capital Economics, notes that rising Chinese manufacturing competitiveness is squeezing most East Asian trade balances.
This reflects a larger reshuffle: whoever holds a chokepoint in the AI supply chain profits from China trade — right now, that position belongs to Korean memory chips.
Can Korea's advantage last?
The surplus depends heavily on a single product category. If AI investment slows or chip prices retreat, the surplus could narrow fast.
In plain terms = Korea hasn't out-competed China across the board — it simply holds the one part AI craves most. This looks more like a window-of-opportunity card than a structural edge.
Content is for reference only, not financial advice.