Data released on Saturday revealed that July exports surged 62.8% year-over-year to $98.89 billion, marking South Korea's second-highest monthly figure ever, trailing only June's record $102.25 billion. After adjusting for working days, export growth accelerated to 69.6%. While this pace eased from June's revised 70.7%, it significantly exceeded economists' median forecast of 59.5%. Imports rose 26.5% to $68.56 billion, resulting in a trade surplus of $30.32 billion, exceeding the $30 billion threshold for the second consecutive month.
The semiconductor "super-cycle" continues: Chip exports soared 178.8% to $41 billion. Semiconductors once again served as the absolute core engine of South Korea's exports. July semiconductor exports reached $41.01 billion, skyrocketing 178.8% year-over-year, marking the second straight month above the $40 billion mark. Although this dipped slightly from June's record $44.8 billion, it still represents the second-highest historical figure. Sustained investment in AI infrastructure is the primary driver of chip demand. Rising fixed prices for DRAM and NAND flash memory, coupled with surging demand for server memory driven by the AI expansion and the arrival of the inference era, collectively supported the semiconductor's robust performance. SK hynix reported a 13-fold surge in net profit for the same period, reaching an all-time high. Computer-related product exports surged 404% year-over-year to $4.79 billion, fueled by growing enterprise SSD demand amid AI infrastructure investment expansion by major tech firms. Wireless communication equipment exports rose 51% to $1.81 billion, supported by steady sales of premium smartphones like the Galaxy S26 series.
Export structure is showing a trend toward diversification. Excluding semiconductors, combined exports of other categories grew approximately 26% year-over-year. Of the 20 major export categories, 19 posted positive growth, with only home appliances seeing a decline. Automobile exports rose 7% to $6.2 billion, driven by global demand for eco-friendly vehicles like hybrids. Petroleum products gained 34.1% to $5.7 billion, lifted by rising oil prices. Petrochemical products increased 10.3%, and ship exports grew 46.9%. The Minister of Trade, Industry and Energy, Kim Gwang-gyeom, stated that the diversification of the export portfolio is showing sustained results.
From an export destination perspective, AI-driven semiconductor demand provided broad global support. Exports to China surged 96.2% year-over-year to $21.68 billion, exceeding the $20 billion mark for the second consecutive month, primarily driven by chips, non-ferrous metals, and petroleum products. Exports to the US grew 68.7% to $17.43 billion, propelled by AI data center investment projects from major tech companies. Exports to the Middle East, previously impacted by conflict, also recorded their first growth since January.
The robust export data provides fresh support for the central bank's potential further tightening. Last month, the Bank of Korea raised its benchmark interest rate by 25 basis points to 2.75%, marking its first rate hike since early 2023. Governor Rhee Chang-yong has since indicated that policymakers still see a need for further rate increases, but the timing and pace will depend on inflation, economic growth, and financial stability conditions. On the inflation front, July's consumer price index rose 3.2% year-over-year, with core inflation steady at 2.5%, suggesting underlying price pressures remain resilient. Regarding growth, the economy expanded 0.6% quarter-on-quarter in the second quarter, exceeding economist expectations. Most economists anticipate the central bank will raise rates again by October, with a minority predicting an earlier move at the August 27 board meeting. Governor Rhee noted that the central bank's May forecast for 2.6% annual growth now appears significantly too low and will be "sharply" revised upward in August, citing stronger-than-expected exports, investment, and consumption. The South Korean government projects full-year economic growth of 3% for this year, exceeding forecasts from both the central bank and the International Monetary Fund.
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