South Korea’s preliminary data for the first 20 days of June indicated a 60.4% increase in exports on an annual basis. Calendar-adjusted exports also increased by approximately 50%. This pace was very close to the strong increase of 52.6% in May. The data showed that artificial intelligence-driven global demand significantly supported the country’s foreign trade performance.
Chip exports are at the center of growth
According to customs data, the country’s exports reached 62 billion dollars. In the same period last year, this figure was at the level of 38.6 billion dollars. Imports increased by 23.2% to 44.5 billion dollars. Thus, a foreign trade surplus of 17 billion dollars was recorded.
The semiconductor industry was at the center of this sharp rise. With the acceleration of global artificial intelligence infrastructure investments, demand for memory chips has increased; Manufacturers such as Samsung Electronics and SK Hynix directly benefited from this. Both companies stand out in high-bandwidth memory chips used in artificial intelligence data centers.
Mini dictionary: HBM, or high bandwidth memory, is an advanced type of memory used especially in artificial intelligence processing loads. These chips work with graphics processors in large data centers to provide high-speed data transfer.
Latest data revealed that semiconductor shipments outpaced all other industries. While chip exports increased by 188.4% on an annual basis, the income from this item reached 25.5 billion dollars. Exports of computer products increased by 293.3%. Due to the high course of energy prices, there was also an increase in the shipment of petroleum products.
The central bank is monitoring the effects closely
South Korean policymakers are evaluating the effects of semiconductor-focused growth on the overall economy. While strong chip sales are stated to support growth, tax revenues and asset markets, the weak won and high oil prices may push the central bank to a tighter line.
South Korean Central Bank officials evaluate that the momentum in the semiconductor sector has begun to spread throughout the economy through higher profits, expenditures and investments. However, it is warned that the chip-based income increase may also push inflation through wages and consumption.
Inflation rose to 3.1% in May, the highest level in the last two years, strengthening the possibility of a tighter stance in monetary policy. Authorities point out that high premiums paid in technology companies may increase wage pressure.
Regional distribution also showed that foreign demand is broad-based. Exports to China increased by 86.9%, reaching 13 billion dollars, and exports to the USA increased by 53.9%, reaching 11.4 billion dollars. Sales to Vietnam increased by 75.5% and exports to the European Union increased by 13.6%.
JPMorgan calls for cautious approach
On the other hand, JPMorgan reported that concentration in semiconductor transactions has increased significantly and this could trigger sharp pullbacks. Nikolaos Panigirtzoglou, one of the bank’s analysts, stated that the combination of high positioning and increased volatility paves the way for more frequent market shocks.
According to the bank, one of the main risks is the concentration in indices. As the weight of semiconductor stocks in major indices increases, funds operating with strict risk limits may need to turn to systematic selling when certain thresholds are exceeded. JPMorgan also stated that the market value-income ratio of chip stocks has increased over 6 times, which indicates a remarkable level on the valuation side.
It is stated that portfolio rebalancing at the end of June may also pose a short-term technical risk. The bank predicted that $165 billion worth of stock sales and bond purchases could occur in this process. The same note also included the assessment that many businesses engaged in bitcoin mining operate with narrow profit margins and have become more dependent on price stability.
