"Semiconductors Lead the Way"... The Irony Behind Korea's Export Surge [Weekend Money]

Automobiles Down, Home Appliances Frozen
Delayed Recovery in Traditional Manufacturing Demand
Spread of 'Growth Momentum' Becomes the Pivotal Point

There has been a diagnosis that, for the time being, Korea's exports are highly likely to continue relying solely on semiconductors for growth.

According to Kiwoom Securities on July 5, exports last month surged by 70.9% year-on-year to reach USD 102.25 billion, setting a new all-time monthly record. Expanded investments in artificial intelligence (AI) and strong memory chip prices were cited as the main drivers behind the sharp increase in semiconductor exports.

However, the remarkable export boom has also deepened concerns about the increasing concentration on specific items. As the share of semiconductors rapidly expands, the imbalance in the export structure is emerging as a mid- to long-term risk factor.

By product category, computers and semiconductors are strongly driving the overall increase in exports, whereas final demand in traditional manufacturing sectors has yet to recover sufficiently. While the rate of decline in general machinery and steel has somewhat narrowed, both sectors continue to post negative growth. Automobiles have also shifted to a downward trend starting in the second quarter of this year, with auto parts and home appliances continuing their decline from the first quarter.

In fact, the share of semiconductors in total exports jumped quickly from 29.9% at the end of last year to 43.8% as of June this year. On the other hand, even for industries such as petroleum products and petrochemicals, which have shown some signs of improvement, it is pointed out that the sustainability of this trend is uncertain due to rising international oil prices.

Yumi Kim, a researcher at Kiwoom Securities, said, "It is positive to see the growth rate of non-semiconductor exports expand somewhat this month, but recovery in most manufacturing sectors remains limited. In the mid- to long-term, whether the growth momentum in semiconductors spreads to non-semiconductor industries will be an important criterion for assessing the sustainability of Korea's exports going forward."

This content was produced with the assistance of AI translation services.