SEOUL: South Korea’s exports maintained strong growth in October, highlighting the strength of an artificial intelligence (AI)-driven boom that has powered the economy, even as a recent sell-off in technology stocks raised questions about the durability of the global AI trade.
Exports adjusted for working-day differences climbed 76.1% from a year earlier, according to the Trade, Industry and Resources Ministry data released yesterday. The value of shipments reached US$115.3bil, following the previous month’s record US$121.1bil.
On an unadjusted basis, exports rose 93.7%, while imports climbed 36%, resulting in a trade surplus of US$42.5bil. That compared with a revised 83.7% export increase in September.
The robust figures come in the wake of a sharp global sell-off in technology stocks, fuelled by disappointing earnings and outlooks from major US companies including Amazon.com Inc and Intel Corp that have reignited concerns over the sustainability of the AI investment boom.
Investors have grown increasingly wary about whether the massive spending on data centres and other AI infrastructure will generate sufficient returns.
The concerns spilled over into Asian markets last Friday, with a Bloomberg gauge of regional chipmakers dropping as much as 4.8%. South Korea’s Kospi index, widely seen as a barometer of the AI trade, fell 3.5%, with SK Hynix Inc and Samsung Electronics Co sliding 7% and 3%, respectively.
The market turbulence followed solid earnings announcements and spending plans from South Korea’s biggest chipmakers earlier in the week. SK Hynix reported a seven-fold surge in quarterly profit, while Samsung outlined its intention to boost capital spending by more than 60% this year as demand for advanced chips continues to outstrip supply.
Semiconductors continued to be the main driver of the gains in the country’s trade figures, with chip exports surging 259% from a year earlier to US$56.4bil.
Shipments of computers rose 497%, while petroleum products and automobiles gained 80% and 18%, respectively.
Calendar effects may have complicated the comparisons. The Chuseok holidays fell in September this year and October last year, making working day-adjusted figures a useful gauge of underlying trade momentum.
The continued strength adds to the case for the Bank of Korea (BoK) to raise interest rates this month after policymakers stood pat in October to assess the impact of consecutive increases in July and August. Inflation data due Tuesday will provide another key input before the BoK’s Nov 26 decision.
The export boom is also putting South Korea on course to exceed US$1 trillion in annual shipments for the first time this year, BoK governor Shin Hyun Song said.
That would make it the fourth economy to reach the milestone after the United States, China and Germany, according to the trade ministry.
The figures suggest South Korea’s export engine remained strong at the start of the fourth quarter, even as the benefits of the chip boom have yet to spread evenly across the trade-reliant economy. That divergence complicates the BoK’s task as it weighs strong growth and above-target inflation against weak household demand.
The economy expanded 1% in the third quarter from the previous three months, beating economists’ forecasts for a 0.8% gain.
Facility investment jumped 4.1%, but private consumption fell 0.2%, underscoring the uneven benefits of the semiconductor boom. — Bloomberg
