Half of South Korea's Exports Are Semiconductors... Morgan Stanley: "AI Memory Is in an Exceptionally Strong Cycle" [fn Market Watch]

[Financial News] An artificial intelligence (AI)-driven memory supercycle is effectively driving South Korea's exports. With semiconductors accounting for half of total exports in September, global investment bank Morgan Stanley assessed that an exceptionally strong export cycle is continuing, fueled by AI-related semiconductor demand and rising memory prices. The bank particularly noted that long-term memory supply contracts extending through 2028 are improving demand visibility for the next several years.
According to Morgan Stanley and the Ministry of Trade and Industry on the 2nd, South Korea's semiconductor exports totaled $60.3 billion in September, soaring 262.8% from the same month a year earlier. That represented 49.9% of total exports, which came to $120.94 billion. Computer exports also jumped 435.4% as increased investment in AI infrastructure and data centers drove memory demand.
Kathleen Oh, Morgan Stanley's chief economist for South Korea and Taiwan, assessed, "AI-related semiconductor demand and strengthening memory prices are driving an exceptionally strong cycle."
Morgan Stanley particularly focused on long-term supply contracts in the memory industry. The bank said that, alongside strong memory prices, long-term memory supply contracts extending through 2028 are improving demand visibility for the next several years.
Oh said, "Strong memory prices and long-term memory supply contracts extending through 2028 are adding visibility for several years," adding, "There is further upside potential to the forecast for South Korea's export growth this year, which is in the high-40% range."
Investment in semiconductor production is also continuing. Semiconductor imports rose 92.8% year on year in September, while imports of semiconductor manufacturing equipment increased 49.2%. Morgan Stanley interpreted this as a sign that semiconductor capital expenditure (CAPEX) remains ongoing.
Export strength is spreading beyond semiconductors. The growth rate of exports excluding semiconductors rose from 22.3% in August to 37.4% in September. The growth rate of average daily exports also jumped from 72.5% to 104.9%. Morgan Stanley viewed this as a sign that export momentum is broadening beyond semiconductors.
Total exports last month reached $120.9 billion, up 83.5% from the same month a year earlier. Imports rose 26.0% to $71.1 billion, while the trade surplus reached $49.9 billion, the largest monthly surplus on record.
Oh forecast that "headline growth rates will normalize as base effects weaken," but added, "Export momentum will remain solid as long as memory demand and semiconductor capital expenditure stay at elevated levels."
[email protected] Kim Hyun-jung Reporter