Data released on Sunday showed that although South Korea's total exports have increased, the growth is increasingly reliant on semiconductors, leading to a widening polarization in the export structure.

Although the country's exports are expected to surpass $700 billion for the first time this year, strong performance in a few sectors has masked a general weakness in the broader export base, with many sectors mired in a prolonged slump.

Statistical data shows

According to statistics from South Korea's Ministry of Trade, Industry and Resources, only five of South Korea's 15 flagship export commodities achieved year-on-year growth from January to November this year, with total exports reaching US$640.2 billion, a 2.9% increase year-on-year.

Among the five major industries, the most significant growth was concentrated in the semiconductor, shipbuilding, and bio-health sectors, with increases of 19.8%, 28.6%, and 7%, respectively. In contrast, the growth rates in the automotive and computer industries were negligible, at only 2% and 0.4%, respectively.

The other ten industries experienced a dramatic decline in exports, all showing significant year-on-year decreases. Exports of general machinery fell by 8.9%, petroleum products by 11.1%, petrochemical products by 11.7%, and steel by 8.8%. Exports of displays also declined by 10.3%, textiles by 8.1%, household appliances by 9.4%, and secondary batteries by 11.8%.

The weakness in the machinery, steel, petrochemical, and secondary battery industries, in particular, is attributed to a decline in competitiveness in the face of China's industrial expansion and fierce low-cost competition.

Compared to the Semiconductor industry

In contrast, the semiconductor industry is experiencing a historic surge, largely driven by the booming global artificial intelligence (AI) sector. Increased investment in AI servers and data centers has fueled a surge in semiconductor demand, heralding a supercycle.

As of November, chip exports reached a record $152.6 billion, accounting for 28.3% of the country's total exports, nearly three times the level of the early 2000s.

This increasing concentration of exports in a single sector has raised concerns that the semiconductor supercycle, driven by soaring demand and prices, may not be sustainable in the long run.

Experts warn that any cooling in the semiconductor market, given this unbalanced export structure, could damage South Korea's economic stability. Because semiconductors are highly sensitive to changes in the global IT cycle and AI-related investments, a decline could have widespread consequences, putting pressure on exports, economic growth, employment, and fiscal conditions.

The South Korean Industrial Economic Outlook Report shows

A report released on November 24 by the Korea Institute for Industrial Economics and Trade (KIET) indicates that the semiconductor industry is expected to continue expanding exports of high-value-added products such as high-bandwidth memory next year. However, due to base effects and stabilizing demand, the institute predicts a significant slowdown in overall export growth, with the rate expected to drop from 16.6% this year to 4.7% next year.

"While the price increase of traditional chips exceeded expectations this year, the forecast for next year is more conservative," said Kim Yang-pyeong, a senior researcher at the institute. "As artificial intelligence shifts from training-oriented models to inference-oriented applications, semiconductor demand may moderate."

The Bank of Korea, in its latest economic assessment report, also warned that while the AI revolution represents a long-term trend, the risk of a sharp market correction cannot be ruled out.

"The current semiconductor boom is a double-edged sword, as over-reliance on the industry compared to past cycles could amplify the impact of any economic downturn," the central bank stated.

Ji Man-soo, a senior researcher at the Korea Institute of Finance, emphasized that as China continues its low-cost strategy, Korean companies must adopt industry-specific strategies.

He stated, "Consumer goods manufacturers need to clearly differentiate their products from those of their Chinese competitors through quality and branding, while capital goods and intermediate materials companies should prioritize building stable customer relationships by leveraging supply chain interdependencies, rather than simply competing on price."

Analysts raise earnings forecasts for South Korean chip companies

As the semiconductor industry enters a full-blown "supercycle" (i.e., boom period), forecasts indicate that Samsung Electronics and SK Hynix's combined operating profit next year could approach 200 trillion won. Since early December, major securities firms have consistently raised their profit forecasts for the two chipmakers.

According to a report released by investment banks on December 14th, Kiwoom Securities raised its 2026 combined operating profit forecast for Samsung Electronics to 107.612 trillion won, 29.3% higher than the market consensus (the average forecast from securities firms over the past three months, 83.242 trillion won). iM Securities also raised its combined operating profit forecast for SK Hynix next year to 93.843 trillion won. Combined, the most optimistic forecasts suggest that the combined operating profit of the two companies will exceed 200 trillion won.

The memory semiconductor market, including general-purpose DRAM, is facing a severe supply shortage as production capacity cannot keep up with rapidly growing demand, leading to a sharp rise in prices. A key factor driving this trend is the surge in memory purchases by cloud service providers to build artificial intelligence data centers. According to data from market research firm DRAMeXchange, the average price of general-purpose PC DRAM, DDR4 8Gb 1Gx8, reached $8.10 in November, approximately six times the $1.35 price in January.

Against this backdrop, investors are increasingly turning their attention to Samsung Electronics. Among the world's three largest memory chip manufacturers (the other two being SK Hynix and Micron Technology), Samsung has the largest DRAM production capacity, and its DRAM business accounts for the highest proportion of its revenue. LS Securities stated that competitors are expected to face capacity shortages next year, while Samsung Electronics still has ample room to expand DRAM production. The company added that earnings forecasts could be further revised upwards depending on future memory price trends.

SK Hynix faces stricter constraints on capacity expansion, and its profitability is expected to improve significantly. Hyundai Motor Securities stated that even with a sharp rise in the price of ordinary DRAM, SK Hynix is poised to become the most profitable DRAM manufacturer globally.

The profit expectations for South Korean memory chip manufacturers are on track to reach record highs, thanks to the strong push by major global technology companies to develop their own customized artificial intelligence chips. Demand for high-bandwidth memory produced by Samsung Electronics and SK Hynix is expected to grow significantly as the application-specific integrated circuit (ASIC) market continues to expand in an effort to reduce reliance on Nvidia graphics processing units (GPUs).

Google's Tensor Processing Unit (TPU) is a prime example. The TPU is an AI chip used to train and run Google's Gemini 3 AI model. OpenAI has also begun developing its own AI chip. Amazon Web Services (AWS) has developed the Trainium 3, and Microsoft plans to release its Maia 200 AI chip next year.

Park Yoo-wook, a senior analyst at Kiwoom Securities, stated, "With Samsung Electronics targeting ASIC developers as key customers, the company's high-bandwidth memory shipments are expected to more than triple by 2026 compared to this year." He added, "HBM sales for mainstream ASIC chips are likely to increase significantly in the first quarter of next year, while shipments of HBM4 for Nvidia's Rubin platform are expected to officially launch in the second quarter."

Source: Compiled from koreatimes

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