South Korea's export growth slowed in the first 20 days of October due to a sharp drop in demand for petroleum products and mobile phones.

On Monday, October 21, Korea's General Administration of Customs released export data for the first 20 days of October. The total export value after adjusting for differences in working days increased slightly by 1% compared to the same period last year. In contrast, the total export value for the entire month of September as previously announced increased by 7.5% year-on-year.

The unadjusted export data was down 2.9%, and overall imports fell 10.1%, leading to a trade deficit of up to $1 billion. Specifically, semiconductor exports remained steady, while sales of petroleum products and wireless communication equipment cooled down sharply:

Exports of petroleum products plummeted 40% year on year, exports of wireless communication equipment fell 21.7%, and semiconductor exports increased 36.1%.

Korea has one of the largest refining clusters in the world, operated by companies such as SK Innovation, S-Oil, and GS Caltex. The country mainly relies on imports to meet its energy needs, but it also refines and exports to drive economic growth, making it vulnerable to fluctuations in global oil prices.

In addition, as home to two of the world's largest memory chip manufacturers, South Korea also took advantage of the AI bandwagon this year to export advanced semiconductors to the US and other developed economies.

However, in recent weeks, people have begun to question whether the momentum of chip sales has peaked. According to the data, the export growth rate of South Korea's semiconductors has been slowing for several months in a row. At the same time, the price increase in memory chip shipments also slowed in September.

According to official data released earlier, South Korea's semiconductor exports in September were 13.63 billion US dollars, a record high. Among them, the export value of storage semiconductors surged 60.7% year on year to 8.72 billion US dollars; system semiconductors increased 5.2% to 4.37 billion US dollars.

However, analysts believe this does not mean that South Korea's policymakers will immediately change their outlook on chip exports. In the past, demand remained steady even after peaking, and supported economic growth. Monday's data showed that demand for memory chips is still strong, and may help reduce the negative impact of falling sales of other products.

It is worth noting that earlier this year, the Bank of Korea predicted that the chip boom would continue until 2025, and that the economic growth rate could reach about 2.5%, faster than last year.

Before the data was released, Nomura Holdings economist Jeong Woo Park stated in the report:

“Although export growth appears to have peaked and is ready to begin to decline, our export cycle calculations show that exports are transitioning from a recovery phase to an expansion phase. We expect chip exports to maintain a double-digit growth rate and drive mid-term expansion throughout 2025.”

Meanwhile, Bank of America economists Benson Wu and Ting Him Ho warned that “the potential rise in trade barriers and American self-sufficiency could reduce overall demand for Korean goods.”