South Korea's trade surplus hit an all-time high in May, driven by a semiconductor boom that pushed exports to their fastest growth rate in four decades, according to data released Monday by the Ministry of Trade, Industry and Energy.
Trade surplus reached nearly $27 billion during the month, according to figures from the ministry.
Exports increased 53.2% to $87.8 billion, topping the $80 billion mark for the third straight month, the ministry said. This marks the steepest percentage increase since January 1984, beating the 48.4% growth forecast, according to Investing.com.
"It is truly an unprecedented pace, raising market expectations again and again and exceeding them again and again," Reuters quoted Meritz Securities economist Stephen Lee as saying.
Semiconductor exports surged 169% to $37.2 billion during the year, led by capital investments by U.S. technology companies.
Dynamic Random-Access Memory chip exports soared 370% to $18.6 billion while NAND memory chip exports jumped 207% to $1.7 billion during the month.
Computer exports soared 291% to $4.18 billion due to demand for solid-state drives for artificial intelligence servers.
Wireless communication device exports increased 13% to $1.46 billion.
"Market sentiment appears to be shifting toward the view that the semiconductor upcycle will last longer than previously expected," Bloomberg quoted BNP Paribas economist Jeeho Yoon as saying.
Petroleum product exports jumped 47% to $5.25 billion on rising oil prices, but volume slid 24% amid export control measures.
Automobile exports were an outlier, sliding 5.9% to $5.83 billion, led by logistics disruptions due to the war in the Middle East, as well as difficulties with car parts purchases due to domestic fires and fewer working days.
"The pickup in South Korea's exports in May underscores the resilience of external demand despite uncertainty from the Iran war," Bloomberg Economics' Hyosung Kwon said.
An increase in semiconductor profits could also lead to rises in housing, equities, and wages, Bloomberg reported, citing Kwon.
By destination, exports to China topped the list, increasing 81% to $18.9 billion, while exports to the U.S. rose 59% to nearly $16 billion. Sales to Southeast Asia jumped 58% to $15.9 billion and to the EU, up by 2% at $6.2 billion.
"Exports are likely to remain strong at least through the end of this year and into early next year," Bloomberg said, citing Yoon.
Strong artificial intelligence-driven demand for semiconductors recently translated into surging equity valuations for South Korea's tech giants. Nvidia supplier SK Hynix (KRX:000660) last week joined the $1 trillion market capitalization club for the first time.
SK Hynix's rally came just weeks after its rival, Samsung Electronics (KRX:005930) also topped $1 trillion in market capitalization.
