AI TRENDS | South Korea Think Tank Says Chip Boom Offsets Manufacturing Weakness

South Korea’s state-run think tank said the country’s economy remained on a recovery track, with a boom in the chip industry offsetting a broader slowdown in manufacturing.

According to Jin10, the Korea Development Institute (KDI) said in its monthly economic assessment that exports continued to expand strongly, driven by robust AI-related demand.

KDI said South Korea’s exports in June surpassed $100 billion for the first time, reaching $102.25 billion, up 70.9% year over year and setting a new record.

KDI said that although the growth rate of semiconductor export volumes had slowed, export value remained strong, supported by continued price increases.

Driven by a surge in demand for memory chips, semiconductor export value nearly tripled to $44.82 billion, and monthly exports exceeded $40 billion for the first time.

However, KDI said manufacturing output edged down, citing a slowdown after an earlier rapid rise in semiconductors and continued weakness in other segments.

KDI added that high oil prices and a weaker won against the U.S. dollar could continue to add upward pressure on prices, increase the risk of further rate hikes, and weigh on the recovery in consumption.