South Korea's exports to China rose 14.9 per cent year-on-year to $11.4 billion in July, a new high in nearly 21 months, and it once again became China's second-largest source of imports, Yonhap News Agency reported on 4 August, citing data from South Korea's Ministry of Industry, Trade and Resources (MITR) and the Korea Trade Association (KTA).
From January to July this year, South Korea's exports to China totalled $74.8 billion, with China replacing the US as South Korea's largest export destination once again. Although the U.S.-China trade friction triggered supply chain restructuring, South Korea to China's storage semiconductors, wireless communication equipment parts and other IT intermediate products exports increased, driving South Korea's exports to China showed a strong rebound, January to July cumulative exports to China to catch up with the U.S. exports.
According to statistics released by China's General Administration of Customs, South Korea accounted for 6.7 per cent of China's total imports in the first half of this year, ranking second after Taiwan (7.6 per cent). South Korea has been China's second largest source of imports from 2021 to 2022, and was overtaken by the United States (6.5 per cent) in 2023 to retreat to third place, before returning to second place in the first half of this year.
According to the report, given that the semiconductor industry is expected to continue to the second half of the positive momentum, is expected to South Korea's exports to China is also expected to maintain the momentum of recovery.
However, South Korea's semiconductor exports to China may be affected by U.S. policy. Since the U.S. restricted exports of advanced semiconductor equipment to China in October 2022, the U.S. has been pressuring its allies to adopt the same restrictive measures. The U.S. decided last year to extend exemptions on imports of U.S. chip equipment to Samsung Electronics and SK Hynix factories in China due to South Korea's huge semiconductor investment in the country.
Bloomberg reported that the U.S. has asked South Korea to tighten controls on semiconductor exports to China, including products such as logic chips that are more advanced than 14 nanometres and DRAMs that are more advanced than 18 nanometres. Sources familiar with the matter said that the U.S. may include South Korean-made high-bandwidth memory (HBM), a key component in the manufacture of AI accelerators supplied mainly by Samsung Electronics, SK Hynix and Micron Storage, in its chip controls with China at the end of September.
Although the South Korean government is cautious ahead of the official US announcement, it believes that even if the US introduces new sanctions, the impact will be limited due to the relatively low share of advanced semiconductor products exported to China.
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