South Korea exports seen posting fastest growth in decades on AI chip demand

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South Korea export growth on AI chips

Highlights

South Korea's exports are forecast to rise 93.2% year-on-year in October, marking the fastest growth since January 1974 and the 17th consecutive monthly gain.
AI-driven demand for semiconductors and higher memory chip prices support export volumes and values, with SK Hynix posting a more than seven-fold quarterly profit increase.
Calendar effects, including 22 working days in October versus 20 last year, are significantly inflating export and import growth figures alongside strong chip demand.

October trade outlook before official data

As reported by Reuters, exports from Asia's fourth-largest economy are forecast to rise 93.2% in October from a year earlier, based on the median estimate of nine economists surveyed ahead of official trade data due on Sunday, November 1, at 9 a.m. local time.

If realized, that would mark a 17th consecutive month of export growth and the strongest increase since January 1974. South Korea's exports exceed $800 billion in the first nine months of the year, already above last year's full-year record.

Imports are forecast to rise 39.9% in October from a year earlier, accelerating from a 26.0% gain in September and marking the strongest increase since November 2021. The monthly trade surplus is seen at a median $37.24 billion, narrowing from September's $49.97 billion surplus.

Semiconductors drive growth, calendar effects cloud trend

The AI-led chip upcycle continues to underpin the economy, with demand for semiconductors and firmer memory chip prices supporting export volumes and values. In the third quarter, South Korea's gross domestic product grows 1.0%, beating expectations, while SK Hynix reports a more than seven-fold jump in quarterly profit.

Economists say the export surge reflects both strong chip demand and temporary statistical support from the calendar. October has 22 working days versus 20 a year earlier because of differences in the timing of Chuseok holidays, which often distort South Korea's September and October trade figures.

Park Chong-hoon, an economist at Standard Chartered, says the sharp increases in exports and imports mainly reflect calendar effects and favorable base comparisons rather than a similar acceleration in underlying trade activity. Stephen Lee, an analyst at Meritz Securities, says semiconductors and computers tied to AI investment are leading gains, while momentum is broadening to cars and wireless communication devices.

In our earlier article on the Nasdaq 100’s recent volatility, we examined how worries about AI supply chains and higher financing costs pressured tech and semiconductor-linked shares before a modest rebound. The piece highlighted that the index remained below key moving averages, with mixed momentum signals and a focus on critical resistance levels as markets digested ongoing AI-related risks.

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