South Korea exports lift on AI driven chip surge, markets rally

A poll of 11 economists conducted in Seoul on December 29 showed South Korean exports likely grew 9.0 percent year on year in December, marking a seventh consecutive month of expansion and a slight acceleration from November's 8.4 percent increase. The median forecast attributes the gain chiefly to a jump in semiconductor shipments as global demand for AI related chips strengthens.

Short period customs data for the first 20 days of December offer a nuanced picture. Unadjusted figures cited by several outlets show exports in that window up 6.8 percent year on year, with semiconductors up 41.8 percent and offsetting declines in autos, ships and steel. An alternative series that adjusts for working day differences shows a smaller 3.6 percent increase in the same early month period, down from an 8.2 percent rise in the comparable period last month. The divergence is explicitly tied to the working day adjustment used by some data compilers.

Analysts singled out memory and logic chip shipments as the main driver. “Semiconductor exports remain the anchor, benefiting from AI related demand, as well as stabilising prices of legacy memory products,” Standard Chartered economists said in market commentary. That concentration of strength is visible in market moves, where major chipmakers posted heavy gains. Scanx market briefs reported Samsung Electronics up 1.88 percent and SK Hynix up 5.51 percent, while one note said Samsung reached an all time high. Broad index reports differ, with Scanx placing the KOSPI at 3,562.97 up 3.10 percent, while another brief cited a KOSPI reading of 4,195.05 up 1.58 percent. Foreign investors were reported as net buyers of 1.72 trillion won in one set of flows.

The same poll indicated imports likely rose 2.5 percent year on year in December after a 1.1 percent increase in November, reflecting continued demand for intermediate goods used in chip production and other supply chains. South Korea’s trade reliant economy expanded in the third quarter at its strongest pace in nearly four years, a recovery underpinned by exports and a rebound in consumer spending.

Policy makers and investors are weighing the benefits and vulnerabilities of a chip led upswing. Han Ji young of Kiwoom Securities said semiconductor led export growth “will likely record semiconductor led growth, which can fuel a new year rally.” At the same time Stephen Lee, economist at Meritz Securities warned “There is a lack of momentum in other products. The global manufacturing sector’s capex cycle will have to be revived, which is hard to expect in the near future.”

The immediate market reaction illustrates the near term boost to earnings and investor sentiment from AI related chip demand. Over the medium term the concentration of export gains in semiconductors raises questions about diversification, exposure to geopolitical trade frictions, and the timing of a broader capex recovery needed to sustain manufacturing beyond the chip cycle.