SEOUL, February 26 (AJP) - Despite heightened external uncertainty, exports have posted unexpectedly strong performance so far this year. Preliminary cumulative figures through mid-February show an increase of roughly 30 percent, a notable gain. With the domestic economy still struggling to regain its footing after a prolonged slump, this export surge comes as welcome relief. Still, it remains uncertain how long this momentum can last.
Uncertainty persists in the semiconductor sector, which accounts for more than 30 percent of South Korea's exports. Expectations have been buoyed by surging demand from artificial intelligence (AI) data centers and forecasts of a semiconductor "supercycle," with the market expected to expand by more than 15 percent annually through 2030.
Yet as both the IMF and OECD have cautioned, the path of artificial intelligence remains highly uncertain, and questions persist over whether the enormous investment being poured into the technology by major global tech companies will ultimately pay off.
With OpenAI reportedly scaling back its computing ambitions and Nvidia pulling a long-term investment agreement with it, policymakers and companies should watch for an AI bubble and reassess whether the semiconductor supercycle still has much further to run.
Equally uncertain is the persistence of the so-called "K-boom" in defense, shipbuilding, and nuclear power. Exports of defense products to NATO members have surged following Donald Trump’s retreat from traditional alliance commitments, while deepening South Korea–U.S. cooperation in shipbuilding and nuclear energy has provided an additional boost to export growth. Whether these tailwinds will prove durable remains an open question.
At the same time, South Korean defense exports to NATO members face real headwinds including stiff competition from established suppliers such as France, Germany and the U.S., and a persistent preference among alliance members to source equipment domestically. Nor should Seoul take its partnership with Washington for granted, as U.S. foreign policy has rarely been less predictable.
The same caution applies to industries such as food and biotechnology, which have become notable export drivers in recent years thanks to the resurgence of the Korean Wave. Japan's once-formidable cultural export boom now seems like a relic of another era, and there is no guarantee that the Korean Wave will not lose momentum. South Korea has avoided the catastrophic collapses that scarred Japan, but it has long struggled with sluggish growth.
Meanwhile, emerging competitors - not just China but increasingly India and Viet Nam - are rapidly closing the gap. None of this means the Korean Wave will vanish, but South Korea cannot afford to assume its momentum will last.
It is also worth assessing whether recent export performance truly reflects companies' fundamental competitiveness - that is, enduring strengths such as technological capability, production efficiency, and organizational effectiveness that are less reliant on external conditions.
For example, the technological level of semiconductors, displays, and secondary batteries was already assessed in 2024 as lagging behind China, highlighting how quickly competitiveness may be eroding. If this trend continues, export competitiveness in these industries is likely to decline as well.
Even so, maintaining the current level of exports amid rising global trade uncertainty is no small feat, and both export competitiveness and the Korean Wave appear set to remain resilient for the time being.
For now, South Korea's export-oriented companies and industries seem likely to sustain their growth. However, no company or sector is immune to rapidly changing external conditions, and the risks surrounding the current boom require careful attention and proactive preparation.
Uncertainty persists in the semiconductor sector, which accounts for more than 30 percent of South Korea's exports. Expectations have been buoyed by surging demand from artificial intelligence (AI) data centers and forecasts of a semiconductor "supercycle," with the market expected to expand by more than 15 percent annually through 2030.
Yet as both the IMF and OECD have cautioned, the path of artificial intelligence remains highly uncertain, and questions persist over whether the enormous investment being poured into the technology by major global tech companies will ultimately pay off.
With OpenAI reportedly scaling back its computing ambitions and Nvidia pulling a long-term investment agreement with it, policymakers and companies should watch for an AI bubble and reassess whether the semiconductor supercycle still has much further to run.
Equally uncertain is the persistence of the so-called "K-boom" in defense, shipbuilding, and nuclear power. Exports of defense products to NATO members have surged following Donald Trump’s retreat from traditional alliance commitments, while deepening South Korea–U.S. cooperation in shipbuilding and nuclear energy has provided an additional boost to export growth. Whether these tailwinds will prove durable remains an open question.
At the same time, South Korean defense exports to NATO members face real headwinds including stiff competition from established suppliers such as France, Germany and the U.S., and a persistent preference among alliance members to source equipment domestically. Nor should Seoul take its partnership with Washington for granted, as U.S. foreign policy has rarely been less predictable.
The same caution applies to industries such as food and biotechnology, which have become notable export drivers in recent years thanks to the resurgence of the Korean Wave. Japan's once-formidable cultural export boom now seems like a relic of another era, and there is no guarantee that the Korean Wave will not lose momentum. South Korea has avoided the catastrophic collapses that scarred Japan, but it has long struggled with sluggish growth.
Meanwhile, emerging competitors - not just China but increasingly India and Viet Nam - are rapidly closing the gap. None of this means the Korean Wave will vanish, but South Korea cannot afford to assume its momentum will last.
It is also worth assessing whether recent export performance truly reflects companies' fundamental competitiveness - that is, enduring strengths such as technological capability, production efficiency, and organizational effectiveness that are less reliant on external conditions.
For example, the technological level of semiconductors, displays, and secondary batteries was already assessed in 2024 as lagging behind China, highlighting how quickly competitiveness may be eroding. If this trend continues, export competitiveness in these industries is likely to decline as well.
Even so, maintaining the current level of exports amid rising global trade uncertainty is no small feat, and both export competitiveness and the Korean Wave appear set to remain resilient for the time being.
For now, South Korea's export-oriented companies and industries seem likely to sustain their growth. However, no company or sector is immune to rapidly changing external conditions, and the risks surrounding the current boom require careful attention and proactive preparation.
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