Strong Semiconductor Exports Push South Korea's Trade Surplus with China Near $10 Billion

Containers piled up at Busan Port's Sinseondae Dock. [Photo=Yonhap News]

Global semiconductor price increases have led to a seven-month rise in South Korea's exports to China, resulting in a trade surplus. This marks a significant shift from three years of trade deficits between the two nations.
However, there are concerns that the current gains may be short-lived due to rising semiconductor prices, prompting the need to identify 'post-semiconductor' sectors for growth.
According to the Ministry of Trade, Industry and Energy, exports to China reached $18.9 billion last month, an 80.9% increase compared to the same period last year. This marks the seventh consecutive month of growth since a turnaround in November of last year, with export volumes steadily increasing.
The surge in exports is largely attributed to strong global demand for semiconductors, which has driven prices higher. In May, semiconductor exports to China skyrocketed by 243.2% year-on-year, totaling $9.88 billion. This increase is fueled by high memory prices, as South Korea capitalizes on rising demand for artificial intelligence (AI).
The outlook remains positive. Market research firm TrendForce indicates that sustained AI demand is putting upward pressure on high-bandwidth memory (HBM) prices. If HBM prices rise sufficiently, South Korean semiconductor manufacturers could increase production of profitable DRAM. Analysts predict that the strong export performance of semiconductors could continue into next year.
In addition to semiconductors, exports of IT products such as wireless communication devices and computers are also on the rise. Exports of agricultural and fishery products and cosmetics, driven by the Korean Wave, have increased by 19% ($150 million) and 5% ($140 million), respectively, indicating a robust performance in consumer goods exports.
With strong export figures, there are expectations that South Korea's trade surplus with China, which has been in deficit for three years, could turn positive. The trade balance shifted to a surplus of $350 million in January and has since expanded, reaching $3.79 billion last month. From the beginning of the year until May 25, the trade surplus totaled $9.36 billion.
According to the Korea International Trade Association's K-stat statistics service, the trade surplus with China first surpassed $10 billion in 2003, peaking at $62.8 billion in 2013. From 2010 to 2018, South Korea maintained a trade surplus with China ranging from $30 billion to $60 billion, accounting for nearly half of the country's overall trade surplus, as South Korea exported intermediate goods that China processed for export to the U.S. and Europe.
However, amid escalating U.S.-China rivalry and China's strengthening manufacturing sector, South Korea recorded a trade deficit of $18.1 billion in 2023. This trend continued with deficits of $6.9 billion in 2024 and $11.2 billion last year, marking three consecutive years of deficits. The once lucrative Chinese market, which previously generated surpluses exceeding $60 billion, has become increasingly dependent on semiconductor prices.
Calls for industrial policies that account for potential declines in semiconductor prices are gaining traction. The Ministry of Trade is focusing efforts on consumer goods exports, which are showing strong performance, particularly given the significant economic scale of individual Chinese provinces. A ministry official stated, "Any fluctuations in semiconductor prices could increase export volatility, so we aim to establish distribution networks across provinces to enhance export performance."

* This article has been translated by AI.

Kim SeongSeo