In the second quarter of this year, South Korea’s exports of semiconductors and automobiles reached an unprecedented high, marking a significant milestone in the nation’s trade history. According to the Korea International Trade Association’s statistical system “K-stat” on August 11, semiconductors accounted for 20.3% of total exports, while automobiles made up 11.4%. Combined, these two items represented 31.7% of total exports, amounting to $54.3 billion, the highest quarterly figure ever recorded.

This surge in exports is particularly notable given the historical context. Exports of semiconductors and automobiles first exceeded 25% in the fourth quarter of 2017 and have since remained below the 30% mark. The previous highest proportion was 29.7% in the first quarter of this year. Semiconductors, a key export item for South Korea, saw their share of total exports drop to 13.6% in the first quarter of 2023 due to a prolonged slump. However, the global foundry industry began to recover in the fourth quarter of last year (October to December) due to increased demand from the information technology (IT) sector, including artificial intelligence (AI). This led to a recovery in the export share to 19.0% in the first quarter of this year, and it rose again to 20.3% in the second quarter.

Automobile exports also saw a significant boost, achieving a record quarterly export value of $19.5 billion in the second quarter. This surge was driven by the global trend towards eco-friendly vehicles, including electric and hybrid models. The growth in automobile exports, the top export item to the U.S., resulted in the U.S. accounting for 19.2% of South Korea’s total exports in the second quarter, making it the largest export market for South Korea. This marks the first time in 22 years, since 2002, that the U.S. has become South Korea’s largest export market, with the proportion of total exports to the U.S. (19.2%) also being the highest since 2003.

According to the U.S. Department of Commerce, the share of South Korean automobiles in U.S. automobile imports from January to May this year was 18.5%, up 3.7 percentage points from 14.8% last year. However, the report noted that “the proportion of U.S. exports in South Korea’s total automobile exports ($35.7 billion) exceeded half at 53.2%, indicating a deepening dependence on the U.S.”

Kim Woo-jong, a researcher at the Korea International Trade Association, emphasized the need for diversification of export items and markets. “While South Korea’s exports are concentrated in a few items such as semiconductors and automobiles, diversification of export items is necessary,” he said. “Japan and Taiwan are also focused on automobiles and semiconductors. In the long term, diversification of export items and markets is necessary, but we should not neglect support to secure future competitiveness in the currently well-growing sectors.”