AI-driven demand for memory chips continues to surge, with South Korea's export data once again exceeding expectations. However, rising inflationary pressures are complicating the central bank's policy outlook.
Trade data for the first 20 days of May shows South Korea's export engine, centered on semiconductors, remains in high gear. DRAM exports soared 498% year-on-year, serving as one of the most direct reflections of the global wave of AI infrastructure investment.
According to data from the Korea Customs Service, exports for May 1-20, adjusted for working days, increased by 52.6% compared to the same period last year, surpassing the 49.4% growth seen in the first 20 days of April. On an unadjusted basis, exports surged 64.8%, imports grew 29.3%, resulting in a trade surplus of $11 billion. This growth was once again led by chips, with semiconductor exports skyrocketing 202.1% year-on-year. Exports of computer-related products also surged 305.5%, reflecting the continued strength of AI-related investments.
The robust export figures provide strong support for the South Korean economy. However, rising oil prices and mounting inflationary pressures are complicating the policy outlook for the Bank of Korea. The central bank's first interest rate meeting under new Governor Shin Hyun Song, scheduled for May 28, is drawing significant market attention for potential policy signals.
**DRAM Exports Near Fivefold Growth, Driven by Price and Volume**
Detailed data reveals that South Korea's DRAM exports (including modules) for the first 20 days of May reached $11.527 billion, a 498% increase year-on-year and a 27% rise month-on-month.
Price changes are equally noteworthy. The unit price for DRAM exports (including modules) reached $60,319 per kilogram, up 5% from April and a massive 432% increase year-on-year. Excluding modules, bare DRAM chip exports amounted to $7.488 billion, up 431% year-on-year and 26% month-on-month, with a unit price of $82,820 per kilogram, a staggering 497% year-on-year increase.
NAND flash memory exports reached $954 million, up 178% year-on-year and 7% month-on-month, with unit prices rising 280% year-on-year. SSD exports totaled $2.224 billion, a 452% year-on-year increase and a 14% month-on-month rise, with unit prices up 344% year-on-year.
This data indicates that the surge in memory chip exports is not solely driven by price effects but also reflects substantial growth in shipment volumes.
**Nomura: Semiconductor Price Effects to Extend into Third Quarter**
Nomura Holdings economist Jeong-Woo Park stated that with semiconductor prices continuing to rise, South Korea's export growth is expected to remain strong in the second and third quarters. He also noted that rising oil and chemical product prices will provide additional support for exports in May and June, though this growth primarily reflects price factors rather than a significant expansion in shipment volumes.
By export destination, shipments to mainland China increased by 96.5% year-on-year, while exports to the United States grew by 79.3%, indicating that AI-related demand is spreading across the Asia-Pacific region.
In contrast, automobile and home appliance shipments were relatively weak, creating a clear divergence from the booming semiconductor sector. This highlights the high concentration of South Korea's export driving force within the chip industry chain.
**Rising Inflation Casts Doubt on Bank of Korea Policy Shift**
Behind the strong export data, challenges for South Korea's macroeconomic policy are intensifying. Rising oil prices and a weaker won are increasing import costs, raising market concerns that imported inflation could further permeate the domestic economy.
Even previously dovish members of the Bank of Korea have recently signaled a clear policy shift. New board member Kim Jin Il stated last week that inflation risks, influenced by rising energy prices, have made interest rate cuts difficult, while also warning that risks related to household debt, housing prices, and capital flows remain unresolved. Former dovish member Shin Sung Hwan also indicated before his departure that discussing further rate cuts has become "difficult" against the backdrop of rising inflation risks, marking a significant shift from his previous stance.
Simultaneously, financial stability risks in South Korea continue to draw attention. Household loan growth accelerated in the first quarter, primarily driven by mortgage loans, and apartment prices in Seoul continue to rise, further complicating the central bank's decision-making.
South Korea's GDP grew 1.7% quarter-on-quarter in the first quarter, reversing the contraction from the previous quarter and marking the fastest expansion since the third quarter of 2020. However, with economic recovery momentum coexisting with inflationary pressures, the first interest rate meeting chaired by Governor Shin Hyun Song and its accompanying dot plot will serve as a key reference for the market to gauge the Bank of Korea's future policy direction.
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