South Korea's chip boom powers export growth to four decades

South Korea’s chip boom powers export growth to four decades

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Item 1 of 4 Trucks transport containers at the Uiwang ICD Terminal in Uiwang, South Korea, March 13, 2026. REUTERS/Kim Hong-Ji/File Photo

[1/4]Trucks transport containers at the Uiwang ICD Terminal, Uiwang, South Korea, March 13, 2026. REUTERS/Kim Hong-Ji/File Photo Purchase Licensing Rightsopens a new tab
  • Imports rise 48.3% y/y, against 44.9% forecast
  • Increase in semiconductor sales in relation to AI demand
  • Transport to the Middle East has been affected by political conflicts
  • The impact of higher oil prices will be seen in the coming months
SEOUL, April 1 (Reuters) – South Korea’s exports beat forecasts in March, rising to their highest pace in nearly four decades on an AI-driven drive, but risks from Middle East tensions cast a shadow over the future.
Exports from Asia’s fourth-largest economy, a bellwether for world trade, rose 48.3% from a year ago to a record high of $86.13 billion, preliminary trade data showed on Wednesday, higher than the 44.9% increase in a Reuters poll.

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The annual growth rate topped 28.7% in February and was the strongest since August 1988.

“Semiconductors, which have been leading the growth of exports, will remain strong for now because orders have already been taken,” said Park Sang-hyun, an economist at iM Securities in Seoul.

“However, we still need to see how big the impact of the Middle East crisis will be in the coming months, as there have been supply constraints in the petrochemical sector and high oil prices will weigh on demand in other sectors, such as automobiles.”

On Tuesday, President Donald Trump said the US could stop its military attacks on Iran within two to three weeks and Tehran did not have to make a deal as a requirement for the war to end.

Markets remained jittery, however, as comments highlighted mixed signals from Washington about how quickly the war could end.

WAR IN THE MIDDLE EAST SPREADS THE DANGERS OF THE MEDICINE

Another survey earlier in the day showed that South Korean factory activity expanded at the fastest pace in four years with a rise in production led by semiconductors, although the conflict continued in overseas orders.

South Korea’s Industry Minister Kim Jung-kwan said the government would continue to support firms affected by supply disruptions, warning that uncertainty about export conditions was increasing.

Currently, the demand related to technology and AI has created a demand for goods made in Korea.

Exports of semiconductors rose 151.4% to a record high of $32.83 billion on rising memory prices and increasing server demand for AI investments.

Petroleum products rose 54.9% on the rise in oil prices linked to the Middle East war that began on February 28, while car sales rose 2.2% amid supply disruptions due to the conflict.

To that end, goods exported to China increased by 64.2%, while those to the United States and the European Union increased by 47.1% and 19.3% respectively. Exports to the Middle East fell by 49.1%.

Exports rose 13.2% in March to $60.40 billion, after rising 7.5% in February, as oil prices rose but volume fell due to supply disruptions in the Strait of Hormuz. It was weaker than the 18.0% increase expected by economists but still faster than in September 2022.

The country’s trade balance stood at $25.74 billion, widening from $15.38 billion in the previous month and the highest ever.

It reports on Jihoon Lee; Edited by Stephen Coates and Shri Navaratnam

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