South Korea and Taiwan have surpassed Japan in export amounts for the first time in history during the first half of this year. The surge in demand for artificial intelligence (AI) semiconductors has led to nearly 50% increases in exports from both countries, which possess advanced semiconductor production capabilities. While Japan has also benefited from the AI boom through semiconductor manufacturing equipment and materials, it has fallen behind South Korea and Taiwan in the rapidly growing advanced semiconductor market.
The Nikkei reported on August 7, based on trade statistics from South Korea, Japan, and Taiwan, combined with data from the Japan External Trade Organization (JETRO) and the UN Comtrade database, that South Korea's exports from January to June reached $496.3 billion, exceeding Japan's $384.4 billion by $111.9 billion. Taiwan's exports also amounted to $416.6 billion, surpassing Japan by $32.2 billion. Although Japan's exports increased by nearly 10% compared to the same period last year, South Korea and Taiwan both recorded close to 50% growth, allowing them to overtake Japan.
The driving force behind the export increases for South Korea and Taiwan has been AI semiconductors. In Taiwan, TSMC, the world's largest foundry, leads advanced semiconductor production. In South Korea, Samsung Electronics and SK Hynix supply advanced semiconductors, including memory for AI accelerators.
In the first half of this year, South Korea's integrated circuit (semiconductor) exports reached $149 billion, while Taiwan's were $133.2 billion. Both countries saw integrated circuits account for about 30% of their total exports. Notably, South Korea's integrated circuit exports alone surpassed its total for the previous year. In contrast, Japan's integrated circuit exports were only $21.2 billion, just one-seventh of South Korea's, and accounted for only about 5% of its total exports.
However, Japan's semiconductor industry still has strengths. Companies like Tokyo Electron, Advantest, and Lasertec hold significant global market shares in semiconductor manufacturing equipment. Japan has benefited from supplying equipment and materials for the expansion of semiconductor production facilities worldwide, capitalizing on increased AI investments.
In fact, Japan's semiconductor manufacturing equipment exports in the first half of this year reached $15 billion, far exceeding South Korea's $5.2 billion and Taiwan's $3.5 billion. However, it has not been able to close the gap with South Korea and Taiwan, which are directly producing high-value final products, namely advanced semiconductors. This reflects the current state of Japanese manufacturing, which is unable to sufficiently supply the desired finished products to the global market.
Kenta Maruyama, a researcher at Mitsubishi UFJ Research and Consulting, pointed out, "Even if global semiconductor exports increase, it is difficult for exports of parts, materials, and equipment to rise sharply."
The record depreciation of the yen has also contributed to Japan's export figures appearing smaller in dollar terms. When the yen's value falls, the dollar-denominated export amount decreases even if the yen-denominated amount remains the same. However, the South Korean won and the Taiwanese dollar have also shown weakness against the dollar, making it difficult to attribute South Korea and Taiwan's overtaking of Japan solely to exchange rate factors, as noted by the Nikkei.
This outcome should not be viewed merely as a temporary shift in rankings due to the AI boom. Japan's export quantity index, which reflects actual export volume changes excluding price fluctuations, peaked before the global financial crisis and has remained stagnant in recent years.
Japan's global export ranking has also declined over the long term. According to JETRO, Japan was the world's third-largest exporter from the 1970s to the 1990s, following the United States and Germany, but fell to fourth place in the 2000s behind China. It subsequently dropped to sixth place last year, trailing trade hubs like the Netherlands and Hong Kong.
Since World War II, Japan has grown into a trade powerhouse centered on manufacturing by exporting goods in high demand globally, such as textiles, steel, automobiles, and electronics. However, in the wake of digital transformation, it has struggled to find new key export products to lead the global market. While global tech giants invest heavily in advanced AI development, South Korea and Taiwan have significantly increased their exports based on their semiconductor production capabilities. If Japan fails to secure new key export products that surpass its competitiveness in equipment and materials, the export gap with South Korea and Taiwan may persist even after the AI boom subsides.
* This article has been translated by AI.
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