Is AI Demand Cooling Down? South Korea's July Semiconductor Exports Surge 179% – Samsung Warns Chip Shortage May Last Until 2028

Global markets had initially feared that the artificial intelligence (AI) investment boom was cooling down, but South Korea's latest export data tells a different story. Fueled by sustained demand for semiconductors, memory chips, and data centers, South Korea recorded another strong export performance in July, reaffirming AI as the core engine driving the global tech industry and further strengthening market confidence in South Korea's economy and chip sector.

According to statistics released Saturday (1st) by South Korea's Ministry of Trade, Industry and Energy, adjusted for working-day differences, July exports rose 69.6% year-on-year. Unadjusted, exports increased by 62.8%.

Imports rose 26.5% over the same period, widening the trade surplus to $30.3 billion. In comparison, June's export growth was revised to 70.7%.

Breaking down the export composition, semiconductors were the biggest driver of growth. Fueled by continued enthusiasm for AI and data center investments, along with consecutive price increases for memory chips, South Korea's semiconductor exports surged 178.8% year-on-year in July.

At the same time, as major U.S. tech giants continue to ramp up spending on AI infrastructure, South Korea's exports of computer-related products skyrocketed by over fourfold—an astonishing 404% increase.

Notably, South Korea's stock market had just experienced severe volatility. The Korea Composite Stock Price Index (KOSPI) plunged 22% in July—the largest monthly drop since the 2008 financial crisis—triggered by profit-taking in AI-related stocks.

However, market sentiment quickly reversed. As global capital flowed back into the semiconductor sector, the index recorded its largest single-day gain in history on Friday (31st).

Corporate performance further confirms this optimistic mood. Samsung Electronics (KR005930) reported earlier this week that its chip division's profits increased more than 250-fold year-on-year and announced multi-year supply contracts with several major data center operators.

Samsung further warned that the global chip supply shortage could worsen and potentially extend through 2028.

In contrast, SK Hynix (KR000660), while reporting strong quarterly earnings earlier, failed to meet investors' high expectations, briefly intensifying market concerns over whether tech giants might slow down AI spending.

Looking at regional export distribution, South Korea's exports to China surged 96% in July, while exports to the U.S. rose 69%. Meanwhile, exports to the Middle East, which had declined for five consecutive months due to the Iran conflict, rebounded with a 25% increase in July.

Overall, this export performance demonstrates that despite rising energy prices and geopolitical risks affecting certain industries, South Korea's external demand remains highly resilient.

The South Korean government now forecasts this year's economic growth at 3%, surpassing earlier projections by the Bank of Korea and the International Monetary Fund (IMF). As AI-related investments continue to fuel exports and domestic demand, market optimism about South Korea's economic outlook is steadily rising.