Chip boom drives Korea to largest-ever current account surplus in March

Samsung Electronics' semiconductor plant in Pyeongtaek, Gyeonggi Province / Courtesy of Samsung Electronics

Korea posted its largest-ever monthly current account surplus in March, driven by a sharp rise in semiconductor exports amid strong global demand for artificial intelligence (AI)-related chips, central bank data showed Friday.

According to preliminary data from the Bank of Korea (BOK), the country's current account surplus reached $37.33 billion in March.

That figure surpassed the previous monthly record of $23.19 billion posted in February and marked Korea's 35th consecutive month of current account surplus, the second-longest streak since the 2000s.

The goods account surplus hit a record $35.07 billion, more than tripling from $9.69 billion a year earlier, as exports surged 56.9 percent from a year earlier to a record $94.32 billion. Imports rose 17.4 percent to $59.24 billion.

Strong growth in semiconductors and information technology products continued, while exports of petroleum products, chemical goods and automobiles also returned to growth.

By product, exports of computer peripherals soared 167.5 percent, while semiconductors jumped 149.8 percent. Exports of wireless communication devices rose 13.1 percent, petroleum products increased 69.2 percent, and chemical goods 9.1 percent.

By destination, exports to Southeast Asia rose 68 percent, followed by China at 64.9 percent, the United States 47.3 percent and Japan 28.5 percent. Exports to the Middle East, however, fell 49.1 percent.

The services account posted a deficit of $1.29 billion.

Notably, within the services account, the travel account returned to a surplus of $140 million for the first time since November 2014, helped by a rise in inbound travelers during the spring travel season.

Kim Young-hwan, a senior official at the BOK's economic statistics department, said a tourism boost around K-pop supergroup BTS' comeback concert on March 21 in central Seoul contributed to the surplus.

"The monthly number of foreign visitors exceeded 2 million for the first time in March, partly boosted by the BTS concert, and the increase does not appear to be temporary," he said during a briefing.

Kim also gave a positive outlook for the semiconductor sector, saying, "Looking at semiconductor export prices and shipment volumes, the market does not appear to be facing major instability at this point."

Containers are stacked at a port in Pyeongtaek, Gyeonggi Province, April 1. Yonhap

The semiconductor boom, fueled by soaring global demand for AI-related memory chips, has supported Korea's record external surplus and stronger-than-expected economic growth in the first quarter.

The country's real gross domestic product grew 1.7 percent in the January-March period from the previous quarter, nearly double the central bank's forecast of 0.9 percent.

Some analysts, however, warned that the economy is becoming increasingly dependent on a single sector while many other industries remain sluggish.

"The large current account surplus in March could help strengthen the Korean won and improve the country's external credibility," said Kim Jung-sik, professor emeritus of economics at Yonsei University.

"But the bigger concern is the country's growing dependence on semiconductors. Aside from the chip sector, most industries, including manufacturing, remain in a downturn," he said. "If the global chip cycle begins to turn downward, exports could fall sharply and trigger a shock to economic growth."

Joo Won, head of economic research at the Hyundai Research Institute, offered a similar view.

"Current exports are heavily concentrated in AI-related products, and there are few alternatives capable of offsetting a potential downturn in the semiconductor sector," he said.