South Korea's July exports beat forecasts, propelled by robust demand for AI investments and AI chips. Computer exports surged 404% year-on-year, growing more than fivefold in one year, and semiconductor exports rose 179%, together pushing total exports to the $100 billion threshold.
The export growth was concentrated in certain products and two major markets, bringing new risks. Most of the total export increase came from semiconductors and computers. US-based large technology companies' investments in AI infrastructure drove the increase in computer exports, with increased orders for servers, storage systems and high-capacity hardware for new data centers accelerating exports by South Korean manufacturers.
Increase in South Korea's July computer exports.
Solid-state drives and data center hardware were among the main drivers of this extraordinary growth. AI investments produced concrete results in factories, ports and international trade flows, not just in software and technology stocks.
Semiconductor exports, South Korea's largest export item, rose 179% year-on-year to about $41 billion in July. Higher memory prices and demand for high-capacity products used in AI servers supported this growth. South Korea, where Samsung Electronics and SK Hynix are major producers, is a center of the global supply chain for advanced memory products.
AI servers require more memory and storage capacity than traditional data centers, directly reflected in export revenue. Strong price increases that raised export value show that not all growth came from shipping more products.
Total exports rose 62.8% year-on-year to $98.89 billion in July, beating economists' expectations of about 59% growth. However, this was below June's about 71% jump. July's performance was still one of the strongest monthly results recently, following the first-ever monthly exports exceeding $100 billion in June.
Imports rose 26.5% to $68.56 billion, yielding a trade surplus of $30.32 billion. Although below June's record surplus, exports growing much faster than imports indicated foreign trade continued to support economic growth.
Exports to China rose 96% year-on-year, with semiconductors standing out, while exports to the United States rose 69%, driven by AI infrastructure and technology hardware demand. Exports to the Middle East rose 25%, returning to growth. Petroleum product exports rose 34%, automobiles 7%, and steel products 4.4%, showing growth spreading beyond technology.
Strong demand from both the US and China gave South Korea a significant advantage, but a slowdown in either economy could quickly affect export figures. The concentration of growth in semiconductors and computers could bring high income if AI investments continue, but growth could slow rapidly if tech companies reduce data center spending or memory prices decline.
Technology company shares on South Korea's stock market recently experienced sharp fluctuations, as investors accept the strength of AI demand but question how soon high investments will turn into revenue and profit. US technology companies' investment budgets, memory prices and orders from China will be closely watched in the coming period.
The AI race is becoming a major industrial wave that changes which country buys which products from which country, rather than only a technology-sector story.