The Zhitong Finance App learned that South Korea's early export data for March suggests that South Korea's export scale continues the sharp expansion trend in recent months. The main logic is that exports of chip products and ships have increased dramatically. This provides stronger confidence to South Korean policymakers aiming to achieve faster economic expansion this year. According to the latest data released on Thursday by South Korea, which is regarded by the market as the “canary” of the global economy, exports increased 11.2% year on year in the first 20 days of March, with the overall export value of chip products increasing sharply by 46.5% year on year. Imports fell 6.3%, and the trade balance was approximately US$711 million.
The US and China lead South Korea's exports, and the EU and Vietnam are also other major export destinations for South Korean goods
The products provided by Korean companies can be described as being distributed throughout the global supply chain system, especially chips, auto parts, and electric vehicle batteries. The overall recovery in South Korea's exports generally began at the end of last year, which supports the policy view that exports will drive South Korea's overall economic growth this year.
The global chip industry has entered a recovery cycle, and storage demand has increased dramatically
Global demand for chip products has continued to grow since the end of last year, supporting the economic recovery expectations of South Korea and some regions and countries. Chip exports are critical to South Korea's GDP, and South Korea has top players in the global chip industry such as Samsung Electronics and SK Hynix.
In recent months, global chip demand has maintained a strong growth trend. In particular, driven by chip orders from many smartphone manufacturers, data center operators, and artificial intelligence application software developers around the world, the prices of DRAM storage and NAND flash memory chips have all rebounded sharply, driving a surge in Korean chip exports. According to TechInsights research data, global smartphone shipments in Q4 2023 rebounded 7.1% year on year to reach 317 million units, ending the sluggish trend of nine consecutive quarters in one fell swoop.
In terms of classification, demand for HBM belonging to DRAM is particularly strong. The surge in demand for Nvidia AI GPUs from global companies will inevitably bring extremely strong demand for HBM storage that is fully tied to Nvidia AI GPUs, while SK Hynix from South Korea accounts for the largest share of the global HBM storage market, and Samsung occupies a leading position in the broader DRAM storage market.
According to data released by Korea Customs, the overall export value of South Korea's chip products increased sharply by 46.5% year-on-year in the first 20 days of March. At the same time, South Korea's ship exports can be described as soaring by about 371% compared to the same period last year, while automobile exports showed a decline of about 7.7%.
The Export-Import Bank of Korea predicts that global demand for chips will continue to drive a significant increase in total exports from South Korea. According to the latest export data, the share of chips in South Korea's export data rose 4.5 percentage points to 18.6%, highlighting the extent to which South Korea's export data relies on widely embedded global consumer electronics products and micro high-end electronic devices embedded in large global data centers.
According to SIA (American Semiconductor Industry Association) statistics, global semiconductor industry sales have clearly rebounded since the end of 2023 due to strong demand for AI chips. According to SIA statistics, sales for the fourth quarter of 2023 were approximately US$146 billion, up 11.6% from the fourth quarter of 2022, and 8.4% month-on-month increase compared to the third quarter of 2023. Regarding the semiconductor industry's sales forecast for 2024, SIA President and CEO John Neuffer said in the data report that overall sales in 2024 will increase by double digits compared to 2023.
According to the 2024 semiconductor industry outlook data released by the World Semiconductor Trade Statistics Organization (WSTS), the global semiconductor market is expected to decline by about 9.4% in 2023. However, WSTS is expected to follow a strong recovery and is expected to grow 13.1% in 2024. For 2024, WSTS predicts a market size of US$588.364 billion, which is expected to achieve a sharp increase of 13.1% compared to the previous year. This is also an upward correction of 11.8% in the spring of 2023.
WSTS said that looking ahead to 2024, the global semiconductor market is expected to reach 588.3 billion US dollars, higher than the 576 billion US dollars forecast this spring. This expansion is expected to be mainly driven by the storage sector covering applications such as PCs, large data center servers, and smartphones. It is expected to grow significantly to about 130 billion US dollars by 2024, an increase of more than 40% compared to the previous year; almost all key categories, including discrete devices, sensors, analog chips, logic chips, and MCUs, are expected to show single-digit growth.
The Bank of Korea may insist on high interest rates
The resilience of economic growth brought about by South Korea's strong export data may provide an important reason for South Korea's monetary policy authorities to keep the benchmark interest rate high for a longer period of time. According to reports, the Bank of Korea maintained the benchmark interest rate at 3.5% last month and emphasized that it will continue to fight consumer inflation.
As the market generally expected, the Bank of Korea kept the benchmark interest rate of 3.5% unchanged during the February meeting, and kept South Korea's benchmark borrowing costs unchanged for nine consecutive interest rate meetings, saying it would take more time to evaluate changes in the domestic and foreign economy.
The Bank of Korea's Monetary Policy Committee said in a statement that the central bank will maintain a restrictive monetary policy for a long enough period until it is confident that inflation will move towards the target level of 2%.
Nomura Securities said earlier this week that trade-dependent economies across Asia will benefit from strong US economic growth trends and improving prospects for the European economy this year. Nomura Securities (Nomura) research analysts Rob Subbaraman and Si Ying Toh said in a report: “We expect the Asian economy's export recovery to continue to expand in the coming months.”
According to the breakdown data for the first 20 days of March, the US led the increase in South Korea's export data. South Korea's exports to the US increased 18.2% year on year, exports to Vietnam increased 16.6%, and exports to China increased 7.5%. Exports to Japan fell 6.8%.