"Canary" brings good news! South Korea's January exports preliminary increased by 14.9%, with chip exports surging by 70%

Korea's exports welcome a "good start." Known as the "canary in the coal mine" of the global economy, Korea's exports in the first 20 days of January increased by 14.9% year-on-year, primarily driven by a surge in semiconductor demand fueled by the global artificial intelligence boom.

On January 21, according to data released by the Korea Customs Service, the export value adjusted for working days in the first 20 days of January increased by 14.9% year-on-year, with the growth rate further accelerating compared to the previous month. Among them, semiconductor exports soared by 70.2% year-on-year, continuing the previous growth momentum, mainly benefiting from strong demand driven by global AI and data center investments.

However, affected by the latest U.S. tariff measures and a slowdown in global demand, automobile exports fell nearly 11% year-on-year, and ship exports also declined by 18%. Despite structural pressures, the strong performance of high-tech categories such as semiconductors still narrowed the trade deficit for the month to $626 million.

Bloomberg economist Hyosung Kwon pointed out that the current data confirms that the semiconductor supercycle driven by artificial intelligence is becoming the core support for Korea's exports. Although some industries face headwinds from trade policies, the technology-led export structure has shown significant resilience, providing a crucial buffer for Korea to cope with external uncertainties.

Chip Exports Become the Main Growth Engine

Semiconductors continue to be the core engine of Korea's export growth. According to trade data for the first 20 days of January, chip exports surged by 70.2% year-on-year, continuing the strong growth trend driven by global artificial intelligence and data center investments. This outstanding performance effectively buffered the export weakness exhibited by traditional industries such as automobiles and ships under external pressures.

Korea's key position in the global semiconductor supply chain is further highlighted. In 2025, Korea's total export value is expected to reach a record $709.4 billion, a year-on-year increase of 3.8%, with semiconductor shipments significantly rising by 22% due to strong AI-related demand, demonstrating its structural advantages and growth resilience in the global high-tech industry chain.

According to CCTV News, the White House announced on the 14th of this month that starting from the 15th, a 25% import tariff will be imposed on certain imported semiconductors, semiconductor manufacturing equipment, and derivatives According to CCTV News, U.S. Secretary of Commerce Gina Raimondo subsequently threatened that South Korean memory chip manufacturers could face tariffs of up to 100% if they do not increase production in the United States.

At the same time, exports of wireless communication devices and petrochemical products achieved significant growth of 48% and 18%, respectively, further enriching the structural support for South Korean exports and enhancing overall trade resilience.

From a regional performance perspective, exports to China increased by 30.2%, and exports to the United States grew by 19.3%, with major markets maintaining robust demand. However, exports to the European Union and Japan decreased by approximately 15% and 13%, respectively, indicating a clear structural differentiation in South Korean exports amid the backdrop of global economic and policy differences.

Automotive Industry Under Pressure from U.S. Tariffs

Automotive exports became a major drag on South Korea's trade data in January, falling nearly 11% year-on-year, directly reflecting the dual pressures of escalating U.S. tariff policies and slowing global demand. Shipbuilding exports also declined by 18%, further confirming the headwinds faced by some traditional manufacturing sectors.

Although South Korea and the U.S. previously reached a landmark trade agreement that set the maximum tariff on South Korean goods imported to 15%, and the tariffs on automobiles and parts were retroactively lowered to this level starting last November, this rate is still significantly higher than the preferential arrangements under the original free trade agreement, leading to continued pressure on related industries.

As an open economy with exports accounting for more than 40% of GDP, the structural elevation of the tariff environment has raised market concerns about the long-term competitiveness of South Korean exports. How to achieve a rebalancing between the pull of the technology industry and the pressures on traditional industries will be a key issue for South Korea in responding to changes in the external trade environment.

Currency Depreciation Brings a Double-Edged Sword Effect

The continued weakening of the Korean won has provided crucial support for South Korean exports, with the won depreciating by more than 8% against the U.S. dollar since the end of June. While currency depreciation enhances the price competitiveness of export products overseas, it also significantly raises import costs, thereby exacerbating inflationary pressures. Currently, both the overall and core consumer price indices in South Korea have consistently exceeded the central bank's policy target of 2%, and the central bank previously warned that if the won continues to weaken, it will further elevate price pressures on imported goods, raw materials, and components.

In this context, the Bank of Korea maintained the benchmark interest rate at 2.5% for the fifth consecutive time last week and effectively adjusted its stance to a neutral policy by removing references to "considering interest rate cuts in the future" from its policy statement. Bank of Korea Governor Lee Chang-yong stated that the current economic outlook carries both upside and downside risks, and the monetary policy committee will decide on the next policy direction after assessing subsequent data