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South Korea, Taiwan exports surpass Japan's for first time in H1, led by AI chips

From Hankyoreh · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

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  • South Korea and Taiwan's exports surpassed Japan's for the first time in the first half of the year, driven by surging demand for AI semiconductors.
  • South Korea's exports reached $496.3 billion and Taiwan's $416.6 billion, significantly exceeding Japan's $384.4 billion during the same period.
  • While Japan maintains an edge in semiconductor manufacturing equipment, its overall semiconductor exports lag far behind South Korea and Taiwan, which have capitalized on the AI boom.

The global surge in demand for artificial intelligence (AI) semiconductors has dramatically reshaped East Asian trade dynamics, with South Korea and Taiwan eclipsing Japan in exports for the first time in the first half of this year. This shift underscores the growing dominance of these nations in the high-tech chip market.

Analysis of trade statistics reveals that South Korea's exports totaled $496.3 billion (approximately 703.7 trillion won) from January to June, while Taiwan recorded $416.6 billion (around 590.7 trillion won). Both figures significantly surpassed Japan's $384.4 billion (about 545 trillion won) in the same period. This represents a remarkable achievement, with South Korea and Taiwan experiencing export growth rates nearing 50%, compared to Japan's nearly 10% increase.

South Korea and Taiwan have reaped significant rewards by capturing the trend of the intense competition among major tech companies to develop cutting-edge AI.

— NikkeiAnalyzing the reasons behind South Korea and Taiwan's export success in the AI semiconductor market.

The primary driver behind this export boom is the advanced AI semiconductor sector. Companies like Samsung Electronics, SK Hynix in South Korea, and TSMC in Taiwan have absorbed the escalating global demand fueled by massive investments in AI development. Integrated circuit exports constituted approximately 30% of South Korea's and Taiwan's total exports, with South Korea surpassing its entire annual integrated circuit exports from the previous year within just six months. In contrast, Japan's integrated circuit exports accounted for only about 5% of its total, amounting to $21.2 billion.

While Japan maintains a strong position in semiconductor manufacturing equipment, with exports of $15 billion in the first half, significantly higher than South Korea's $5.2 billion and Taiwan's $3.5 billion, this advantage in materials and equipment has not compensated for the gap in finished high-end semiconductor products. The Nikkei attributed the widening gap to the rapid growth of the finished product market, which Japan has struggled to match. The weakening yen also contributed to a lower dollar-denominated export value for Japan, though currency fluctuations alone do not explain the disparity.

Japan may fall further behind in both manufacturing and services if it fails to create a growth model suitable for the digital age.

— NikkeiWarning about Japan's future economic prospects if it does not adapt to the digital era.
DistantNews Editorial

Originally published by Hankyoreh in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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