Thematic Spotlight: Is AI South Korea’s New Top Export?

Global demand for artificial intelligence (AI) memory chips is reshaping South Korea’s economy. Over the past year, South Korea has experienced a significant increase in shipment traffic as countries competed to secure advanced semiconductors and high bandwidth memory chips. According to Bloomberg, average daily shipments in and out of the country rose 12.4% year-over-year in June, and while exports increased by 5%, imports dropped 7.5%.¹ This shift has resulted in a South Korean trade surplus of US$8 billion, the country’s strongest performance since September 2020.²

Semiconductors have been the key drivers of South Korea’s recent export boom. In June, the value of computer chips exported from South Korea reached US$13.4 billion, the highest monthly value on record and an increase of more than 50% year-over-year.³ This surge can be largely attributed to SK Hynix and Samsung Electronics, who have established themselves as critical AI-hardware manufacturers over the past year. Analysts currently forecast SK Hynix’s AI-hardware revenues to grow by as much as 105% in 2024, while Samsung Electronics’ foundry and memory chip division could see revenues grow by almost 70%.⁴

While prospects continue to look bright for the industry heading into the H2 2024, the semiconductor firms have refused to settle. SK Hynix, in particular, recently revealed that its factory capacity for making AI-oriented memory chips had been almost fully booked out to the end of 2025.⁵ In response, the company disclosed plans to invest US$74.8 billion through 2028 on manufacturing capacity and development of its memory chips.⁶ The firm will also invest US$2.4 billion through SK Telecom and SK Broadband to build out its datacentre business.⁷

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^{This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information is not intended to be individual or personalised investment or tax advice and should not be used for trading purposes. Please consult a financial advisor or tax professional for more information regarding your investment and/or tax situation.}