South Korea's semiconductor exports surged 202% in the first 20 days of May, with DRAM export value soaring 498% year-on-year.

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AI-driven demand for storage chips continues to surge, South Korea's export data once again exceeds expectations, but rising inflationary pressures are making the central bank’s policy outlook increasingly complex.

Trade data for the first 20 days of May from South Korea show that the semiconductor-driven export engine remains in high gear. DRAM exports soared 498% year-on-year, becoming one of the most direct reflections of the global wave of investment in AI infrastructure.

According to Korea Customs data, exports adjusted for working days from May 1 to 20 increased by 52.6% year-on-year, higher than the 49.4% increase during the first 20 days of April. Unadjusted, export growth reached 64.8%, imports grew 29.3%, and the trade surplus stood at $11 billion. This round of growth was once again led by chips, semiconductor exports surged 202.1% year-on-year, and computer-related products exports jumped 305.5%, reflecting sustained robust AI-related investment.

The impressive export numbers provide strong support for South Korea’s economy, but at the same time rising oil prices and inflationary pressure are making the Bank of Korea’s policy outlook increasingly complex. On May 28, the Bank of Korea will hold its first interest rate meeting under new governor Shin Hyun Song, and policy signals are highly anticipated in the market.

DRAM exports nearly quintuple, both price and volume rise

According to detailed data disclosed by market analyst @jukan05, during the first 20 days of May, South Korea’s DRAM exports (including modules) reached $11.527 billion, up 498% year-on-year and 27% month-on-month.

Changes in price levels are also striking. The unit price of DRAM (including modules) exports reached $60,319/kg, up 5% from April and 432% year-on-year. Excluding modules, bare DRAM chip exports were $7.488 billion, up 431% year-on-year, 26% month-on-month, with a unit price of $82,820/kg—up 497% year-on-year.

NAND flash exports were $954 million, up 178% year-on-year, 7% month-on-month, unit price up 280% year-on-year; SSD exports hit $2.224 billion, up 452% year-on-year, 14% month-on-month, unit price up 344% year-on-year.

The above data indicate that this boom in storage chip exports is not purely driven by price effects, as shipment volumes also show substantial growth.

Nomura: Semiconductor price rise effect will continue through Q3

Nomura economist Jeong-Woo Park said that with ongoing semiconductor price increases, South Korea’s export growth is expected to remain strong in Q2 and Q3. He also pointed out that rising oil and chemical prices will provide extra support for exports in May and June, but this part of growth largely reflects price effects rather than substantial shipment expansion.

In terms of export destinations, exports to mainland China grew 96.5% year-on-year, and exports to the US grew 79.3%, showing that AI-related demand is spreading across the Asia-Pacific region.

Exports of automobiles and home appliances remain relatively weak, forming a sharp contrast with the booming semiconductor sector, indicating that South Korea’s export driving force is highly concentrated in the chip industry chain.

Rising inflation casts doubt on Bank of Korea policy shift

Behind strong export numbers, challenges to South Korea’s macroeconomic policy are intensifying. Rising oil prices and a weakening won are pushing up import costs, raising market concerns that imported inflation could further transmit into the domestic economy.

Even previously dovish members of the Bank of Korea have recently signaled noticeable shifts in policy. New member Kim Jin Il said last week that higher energy prices have made rate cuts difficult due to increased inflation risks, and warned that household debt, home prices, and capital flow risks have yet to be resolved. Former dovish member Shin Sung Hwan also said before leaving office that given rising inflation risks, further rate cuts have become "difficult," a clear change from his previous stance.

Meanwhile, financial stability risks in Korea continue to attract attention. In Q1, household loan growth accelerated, driven mainly by mortgages, and apartment prices in Seoul continue to rise, further complicating the central bank’s decision-making.

In Q1 this year, Korea’s GDP grew 1.7% quarter-on-quarter, overturning last quarter’s contraction and representing the fastest expansion since Q3 2020. But with both economic recovery momentum and inflationary pressures, the first rate meeting under Shin Hyun Song and its dot plot will become key references for market judgments of the Bank of Korea’s policy direction.

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