South Korea's September Surplus Tops $60 Billion on Chip Exports

By Sophie Lindqvist

South Korea's current-account surplus reached a record $61.46 billion in September, the first monthly reading above $60 billion, according to preliminary Bank of Korea data released on the 5th.

The result, worth about 82.5 trillion won, exceeded June's $49.73 billion record. January through September produced a $340.66 billion surplus, more than four times the $83.89 billion recorded in the same period last year.

What did the headline balance show?

The Bank of Korea expects this year's annual surplus to exceed the $450 billion projection in its August economic outlook. That is a forecast, not a confirmed outcome.

The goods balance contributed a record $62.75 billion surplus, beating June's $47.89 billion. Goods exports reached $130.72 billion, up 92.4% from a year earlier. Both information-technology and non-information-technology exports strengthened. Exports topped $100 billion for a fourth consecutive month, and September's total also set an all-time high.

Which export categories drove the gain?

Customs-clearance data showed the sharpest year-on-year increases in computer-peripheral SSDs, up 392.3%, and semiconductors, up 260.3%. Petroleum products ranked third, rising 73.3%.

Those are growth rates, not dollar values. The release does not identify semiconductor export revenue, product families, process nodes, wafer sizes, customers or capacity additions. It also provides no unit shipment or average selling price data, so price and volume effects cannot be separated.

Capital-goods imports rose 42.3%. Within that group, semiconductor imports climbed 92.8%, semiconductor-manufacturing equipment increased 49.2%, and information and communication devices rose 37.3%.

Those import rates do not identify specific tools, projects or capacity additions. The data establish strong trade in chips and production equipment, but they do not quantify future wafer output.

How broad was the trade expansion?

Regional growth was broad but uneven. Customs-clearance exports rose across most major destinations.

• United States exports increased 136.9%, China 123.1%, and Southeast Asia 113.2%.
• Japan increased 25.2%, while the eurozone gained 21.2%.
• Middle East exports fell 14.1%, and Central and South American exports declined 3.6%.

These destination figures do not identify the companies, end products or industries behind the gains. That limits what the regional numbers reveal about semiconductor demand.

Imports reached $67.97 billion, up 29.4%, well below the export growth rate. Raw-material imports rose 21.3%, led by gas at 42.5%, crude oil at 38.4%, and coal at 24.2%. Consumer-goods imports increased 2.0%.

The trade expansion ran through both sides of the ledger, although exports grew much faster. The figures do not separate price, volume and mix effects for any category.

What did services and income contribute?

The services account posted a $3.35 billion deficit. That was smaller than the $3.48 billion deficit in September last year, but larger than August's $1.68 billion deficit.

The services result narrowed year on year but reversed August's improvement, leaving the goods surplus to carry the headline account.

The travel deficit stood at $770 million, following August. Outbound travelers fell from 2.43 million to 2.26 million, while inbound travelers declined from 2.24 million to 2.06 million.

The primary-income surplus widened from $1.92 billion in August to $2.65 billion in September. Dividend income rose from a $1.18 billion surplus to $2.24 billion as the seasonal effect of quarterly securities-investment dividend payments dissipated.

Where did investment flows go?

Financial-account net assets, defined as assets minus liabilities, increased by a record $54.34 billion. The previous record increase was $46.71 billion in June.

For direct investment, Korean investment abroad increased by $11.43 billion, and foreign investment in Korea increased by $6.52 billion.

Portfolio flows moved in opposite directions. Korean overseas investment increased $16.63 billion, while foreign domestic investment decreased $13.81 billion.

Domestic overseas securities investment, including retail investors trading overseas known as “Seohak ants,” recorded $17.29 billion. It was the second-largest scale on record after October of last year.

Overseas stock investment remained high at $9.91 billion, while bond investment set a record increase of $6.72 billion. Foreigners' domestic stock investment fell $13.74 billion, and bond investment fell $70 million.

What does the forecast leave unresolved?

The Bank of Korea expects the full-year current-account surplus to exceed the $450 billion projected in its August economic outlook. September exports outpaced imports by 92.4% versus 29.4%, although the services account remained in deficit.

The next test is whether September's semiconductor and equipment strength persists; the bank supplied no capacity, pricing or product-mix assumptions for its full-year target.